Hussein v Secretary, Department of Education & Training

DECISION UNDER REVIEW 4 A delegate of the respondent found that the applicant had not complied with the conditions for his continued approval as an approved provider of child care services through Super Family Day Care and that cancellation was the appropriate sanction to impose in respect of that non-compliance. The non-compliance found by the delegate included that the applicant had: (a) failed to provide complete and accurate reports to the respondent in relation to the care being provided as required under the Administration Act, the purpose of which is to enable the respondent to establish whether a person is eligible to receive child care fee assistance and, if so, what level of fee assistance should be provided; (b) submitted child care service attendance reports claiming that educators were providing family day care services when they were overseas, and claiming that children were receiving family day care services when they were overseas, and failing to bring these matters to the respondent's attention; (c) provided 4,453 inaccurate attendance reports and received $98,976 in child care assistance fee payments that could not be passed on to an eligible recipient; (d) failed to pass on fee assistance payments to eligible recipients as a fee reduction; (e) failed to remit moneys to the respondent that could not be passed on to an eligible recipient; (f) been issued with an "Emergency Action Notice" by the Victorian State Regulatory Authority (which is responsible for the enforcement of the Education and Care Services National Law in Victoria) on 9 January 2019 with respect to operating in a manner that posed, or was likely to pose, an immediate risk to the safety, health or well-being of a child or children being cared for by the service; and (g) failed to demonstrate that it had instituted or could maintain effective governance arrangements to ensure compliance with the family assistance law. 5 The delegate decided to impose a sanction, and having considered s 195H of the Administration Act, together with r 52 of the Minister's Rules, decided to cancel the applicant's provider approval. In deciding that it was more appropriate to cancel the applicant's provider approval than to impose a different sanction, the delegate had regard to the following matters: (a) the non-compliance was of a systematic and ongoing nature, having occurred over a number of years and involving approximately 5,417 contraventions; (b) the non-compliance appeared to have resulted in significant and multiple overpayments of child care fee assistance totalling $98,976 (which did not include over $1.77 million in child care assistance payments attributed to 117,785 sessions of care when Centrelink customer reference number details had not been supplied to the respondent, with the consequence that child care fee assistance could not be verified); (c) it was likely that overpayments would continue to occur if the applicant continued to operate the service; (d) it may be concluded that: (i) the applicant was aware of his obligations and elected to ignore them; (ii) the applicant's governance and administration practices were insufficient to enable compliance with the family assistance law; or (iii) the applicant lacked the ability to understand his obligations; (e) the non-compliance suggested that the applicant was no longer a fit and proper person to provide a child care service; and (f) the non-compliance may constitute an unacceptable risk to the safety, health or wellbeing of the children being cared for by the applicant's child care service, as: (i) the applicant was issued with a number of notices by the Victorian State Regulatory Authority which identified non-compliances that appeared to pose a direct threat to the safety, health or wellbeing of children; (ii) the applicant had reported care when no care occurred at the service, or where care had been provided at another service. The applicant had also claimed children were in care when they were not. In the delegate's view, this demonstrated that the applicant had failed to ensure that the children being cared for were appropriately accounted for, and was not monitoring the educators as required. This in turn indicated that it was unlikely that sufficient safety and/or educator home visits were occurring; (iii) the applicant appeared to have exceeded the educator to child ratio on a number of occasions; (iv) it appeared the applicant did not have procedures in place to ensure all registered educators (and persons aged 18 years or over residing in each family day care residence) held a current working with children card; (v) it appeared the applicant had failed to keep evidence of the qualifications of, and training undertaken by, the educators engaged by the service; and (vi) it appeared the applicant did not hold all required information on the service's register of family day care educators, coordinators and educator assistants in relation to each educator and coordinator. 6 The delegate therefore was of the opinion it would be appropriate to impose a sanction of cancellation.

RELEVANT LEGISLATION 7 The sanctions which may be imposed for breach of conditions for continued approval are set out in s 195H of the Administration Act, which relevantly provides: (1) If the Secretary is satisfied that an approved provider has not complied, or is not complying, with a condition for continued approval of the provider, the Secretary may do one or more of the following: (a) suspend the provider's approval; (b) cancel the provider's approval; (c) suspend the provider's approval in respect of one or more child care services; (d) vary the provider's approval so that the provider is not approved in respect of one or more child care services; (e) reduce the number of any child care places allocated to the service under section 198B; (f) suspend, for a maximum of 3 weeks, payments under section 67EB of fee reduction amounts in respect of sessions of care provided by one or more approved child care services of the provider. (2) In exercising a power under subsection (1), the Secretary must have regard to any matters prescribed by the Minister's rules as matters to be taken into account by the Secretary in applying the subsection to approved providers. … 8 Section 199A of the Administration Act sets out the procedure that must be followed before a sanction can be imposed under s 195H. Section 199A provides: (1) Before doing a thing mentioned in subsection 195H(1) or section 197B, 197D or 197E, the Secretary must give a notice to the provider concerned that: (a) states that the Secretary is considering doing the thing; and (b) sets out the grounds for doing the thing; and (c) summarises the evidence and other material on which those grounds are based; and (d) summarises the effect of doing of the thing on eligibility for CCS or ACCS in respect of a session of care provided by an approved child care service of the provider; and (e) summarises the provider's rights under this Act to seek a review of the decision to do the thing; and (f) invites the provider to make written submissions to the Secretary, within 28 days, stating why the thing should not be done. (2) The Secretary must have regard to any submissions made by the provider in accordance with an invitation under paragraph (1)(f) in deciding whether to do the thing. 9 Rule 52 of the Minister's Rules prescribes matters for s 195H(2) of the Administration Act to be taken into account by the Secretary in relation to the exercise of a power to impose a sanction under s 195H(1). That rule relevantly provides: (1) This section prescribes matters for subsection 195H(2) of the Family Assistance Administration Act to be taken into account by the Secretary in relation to the exercise of a power to impose a sanction under subsection 195H(1) of that Act for having not complied, or not complying, with a condition (or conditions) of the provider's continued approval. (2) This section does not limit the matters the Secretary may take into account for that purpose. Whether to impose a sanction (3) In deciding whether to impose a sanction on the provider, the Secretary must take into account whether the provider's non-compliance: (a) appears to be an isolated incident or forms part of a history of apparent contraventions engaged in by the provider; or (b) has resulted in overpayments of CCS and ACCS, or is likely to result in such overpayments; or (c) involves a failure to reasonably cooperate with a person exercising powers under the family assistance law; or (d) involves the deliberate or reckless giving of inaccurate, false or misleading information to the Secretary, including in a report under subsection 204B(1) of the Family Assistance Administration Act; or (e) is associated with a debt to the Commonwealth (whether or not discharged) under Division 2 of Part 4 of the Family Assistance Administration Act; or (f) is minor or serious in nature; or (g) is associated with any other relevant aggravating or mitigating factors in relation to the non-compliance. Which sanction to impose (4) The Secretary must take into account the following matters in considering which sanction to impose: (a) whether it would be more appropriate to exercise the power to suspend the provider's approval under paragraph 195H(1)(a) of the Family Assistance Administration Act rather than to impose a different sanction, having regard to the following matters: (i) whether the provider's non-compliance is of a systemic and ongoing nature (taking into account that systemic and ongoing contraventions may be more appropriately dealt with through cancellation rather than suspension); (ii) whether the provider's non-compliance has resulted in significant debts of CCS and ACCS, or is likely to result in overpayments of CCS or ACCS if the approval is not suspended (taking into account that the higher the debts or overpayments, the more appropriate it is to cancel rather than suspend); (iii) any other relevant matters; (b) whether it would be more appropriate to cancel the provider's approval under paragraph 195H(1)(b) of that Act rather than to impose a different sanction, having regard to the following matters: (i) whether the non-compliance has resulted in significant and multiple overpayments of CCS and ACCS, or is likely to result in such overpayments if the approval is not cancelled; (ii) whether the non-compliance indicates a deliberate or reckless disregard for the obligation to comply with the condition, or a lack of ability to understand that obligation; (iii) whether the non-compliance demonstrates that the provider is no longer a fit and proper person to provide a child care service for the purposes of section 194E of the Family Assistance Administration Act; (iv) whether the non-compliance constitutes an unacceptable risk to the safety, health or wellbeing of children being cared for in one or more child care services for which the provider is approved; (v) any other relevant matters. 10 Thus, under the statutory framework, before imposing a sanction, the delegate was required to follow the procedure set out in s 199A of the Administration Act, which includes having regard to any submissions made by the provider in accordance with an invitation under paragraph (1)(f). In deciding whether to impose a sanction under s 195H(1) of the Administration Act the delegate was also required by s 195H(2) of the Administration Act, read with r 52(3)(g) of the Minister's Rules, to consider any relevant mitigating factors in relation to the non-compliance.

GROUNDS OF REVIEW 11 The applicant seeks review of the decision under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act), relying on three grounds. It is contended that in deciding to cancel the applicant's provider approval with effect from 7 February 2020 the delegate: (a) breached s 195H(2) of the Administration Act and r 52(3)(g) of the Minister's Rules by failing to consider relevant mitigating factors in relation to non-compliance (ground one); and (b) breached s 199A(2) of the Administration Act by failing to have regard to the submissions in relation to mitigating factors made on the applicant's behalf (ground two). 12 It is further contended that the delegate denied the applicant natural justice by failing to give the applicant the opportunity to respond to credible and relevant adverse information that was before the delegate (ground three).

Grounds 1 and 2 13 These grounds were dealt with together by the applicant and can be considered together. It was submitted that the delegate was required by s 195H(2) of the Administration Act, read with r 52(3)(g) of the Minister's Rules, to consider the following mitigating factors set out in the applicant's response to the Sanction Notice as to why his provider approval should not be cancelled, but failed to do so: (a) the errors in relation to the failure to record the educators' customer reference numbers and working with children card details (educator details) in the system administered by the Department of Education (now the Department of Education, Skills and Employment) (the Department) were due to an issue with the applicant's third-party software provider and the applicant had worked with the provider to rectify those issues (the software issue); (b) the applicant had engaged a consulting company to develop an application where educators will sign in electronically and the applicant will be notified of their exact location when they sign in; (c) the applicant would engage a consulting company to complete a compliance, governance and risk assessment audit of the applicant's company; (d) the applicant had increased home visits to educators to at least once a month, unannounced; (e) the applicant was introducing a phone call register to make unannounced phone calls to educators at least once a week; (f) the applicant had updated quarterly feedback forms sent to parents to request information about any change in employment circumstances of parents and any travel plans; (g) the applicant was now requiring parents to submit travel itineraries for any proposed travel, which would then be documented and provided to the person entering the timesheet; (h) the applicant would now cancel the enrolment of a child if the service became aware that the parents had travelled overseas with the child without notifying the service; (i) the applicant would register all educators with the Department of Justice so that an alert would be received one month before a working with children card was about to expire; (j) the applicant had taken the investigation seriously, considered additional policies and procedures it would implement to ensure compliance, admitted non-compliance, and accepted responsibility for the actions of its educators; and (k) in relation to the "child swapping" allegations, despite the parents being asked to identify themselves and their partners as family day care educators, they failed to do so. The applicant had no reason to suspect that the parents were educators (the child swapping allegation). 14 A further mitigating circumstance said not to have been considered by the delegate was that, following consideration of the applicant's response to the Sanction Notice, the number of contraventions and quantum of overpayment decreased substantially from 294,668 instances of non-compliance and an overpayment of $3,311,094 (as alleged in the Sanction Notice), to 5,417 contraventions and an overpayment of $98,976 (as found in the decision). 15 The failure by the delegate to have regard to the submissions and mitigating factors was said to constitute error within the meaning of ss 5(1)(e) and 5(2)(b) of the ADJR Act and/or s 5(1)(b) of the ADJR Act. For the reasons that follow, I find there is no merit in either ground. 16 By s 195H(2) of the Administration Act, the Secretary must have regard to the matters prescribed by the Minister's Rules when deciding whether to impose a sanction under s 195H(1) on an approved provider for non-compliance with a condition for continued approval. Relevantly for present purposes, one of those prescribed matters is whether the provider's non-compliance "is associated with" any other relevant aggravating or mitigating factors "in relation to the non-compliance": r 52(3)(g) of the Minister's Rules. In Azaria Family Day Care Pty Ltd v Secretary [2018] FCA 1640 at [30] the Court, on an application for a stay of a decision of the Secretary to cancel a provider's provider approval, considered it was "arguable" that a decision-maker was required by r 52(3)(g) to take into account policy changes that the provider had said it had implemented to ensure future compliance. I am, with respect, unable to agree. In my view, on the proper construction of r 52(3)(g), "any other aggravating or mitigating factors" are only those factors bearing on the culpability of the non-compliance (increasing or decreasing) which have not otherwise been taken into account under any of the preceding subparagraphs of r 52(3). This construction arises as a matter both of textual and contextual analysis. Rule 52(3)(g) must be read with chapeau to r 52(3), namely "[i]n deciding whether to impose a sanction on the provider, the Secretary must take into account whether the provider's non-compliance is associated with any other relevant… mitigating factors in relation to the non-compliance". Read as a whole, a mitigating (or aggravating) factor to which the delegate must have regard under r 52(3) in considering whether to impose a sanction are factors which have a relationship with the non-compliance. The phrase "associated with" requires a connection between the non-compliance and the identification of factors which mitigate (or aggravate) the non-compliance. The phrase "in relation to the non-compliance" in r 52(3)(g) requires some causative connection between such factors and the non-compliance. Contextually, that construction is consistent with the preceding paragraphs of r 52(3), which are all concerned with matters relating to the commission of the non-compliance itself, and which the Secretary must consider in deciding whether to impose a sanction for the non-compliance. This construction is also consistent with r 52(4), under which the Secretary is required to take broader considerations into account - including "all relevant considerations" under r 52(4)(b)(v) - in deciding whether to cancel the provider's approval. "Relevant considerations" may, in appropriate cases, include remedial action taken by the provider to ensure future compliance, but that does not make them "mitigating factors" for the purposes of r 52(3)(g). 17 On the case as presented, of the "mitigating factors" identified, only two would bear on the culpability of the applicant's non-compliance: (1) the software issue that the applicant gave as the reason why the educator details were not accurately provided; and (2) the "no reason to suspect" claim made by the applicant in relation to the child swapping allegation. Aside from the "mitigating circumstance" said to be that the number of contraventions and quantum of overpayment had decreased substantially from the Sanction Notice to the findings of contravention and overpayment as found in the decision, the other "mitigating factors" identified all relate to steps taken by the applicant by way of remedial action in rectification of the non-compliance of the conditions for his continued approval. Those factors do not bear upon the applicant's culpability in respect of the non-compliance and the delegate was not required to take those factors into account under r 52(3)(g) of the Minister's Rules. Nor was it a "mitigating circumstance" within the terms of r 52(3)(g) that ultimately the number of contraventions and quantum of overpayment was less than as claimed in the Sanction Notice. 18 Furthermore, the reasons disclose that the delegate did have regard to the two matters put forward by the applicant which may be regarded as "mitigating factors" within the terms of r 52(3)(g): (a) as to the asserted software issue in relation to the recording of the educator details, the delegate's reasons for decision disclose that the delegate did consider whether the incomplete educators' details resulted from a third party software provider glitch beyond the control of the applicant, but was not satisfied on the material available to her that it was a software issue as claimed by the applicant and not a failure in the applicant's procedures. The significance of this is that the explanation the applicant gave was not accepted by the delegate and hence was not a "mitigating factor" in relation to the non-compliance; (b) as to the child swapping allegation, in his statutory declaration dated 11 June 2019 and annexed to his submissions in response to the Sanction Notice, the applicant asserted that he was "disappointed" that there were parents who had engaged in that conduct, but it was his view that Super Family Day Care had complied with its obligations under the Administration Act in relation to this issue. The delegate took the applicant's explanation into consideration in determining whether there had been non-compliance, but found there was no evidence demonstrating how the applicant executed and documented his policies and procedures. Further, the delegate expressed concern that the applicant did not appear to understand what child swapping was and did not understand the steps that needed to be taken to prevent it, including actions and documentation as part of such a process. Thus, in this instance also the delegate did not accept what was put to her by the applicant. 19 Nor did the delegate breach s 199A(2) by failing to take these "mitigating factors" into account, as submitted. Not all of the matters raised by the applicant were the subject of separate and specific consideration by the delegate, but they did not need to be. The delegate's reasons disclose a careful consideration of the applicant's extensive submissions, including engaging in a detailed way with the applicant's representations that were relevant to the cancellation of his provider approval under s 195H(1) of the Administration Act. However, in this instance, the delegate found based on the evidence before her that the applicant's non-compliance was of a systemic and ongoing nature, involving a number of contraventions and substantial overpayments. It cannot be said that the delegate disregarded either what the applicant put before the delegate in mitigation of his non-compliance or the applicant's assertions concerning the remedial action he had and would undertake. 20 Finally, although not raised as a separate ground of review, the applicant's written submissions also claimed breaches of s 194E(1)(g) and (k) of the Administration Act, read with r 46(3) of the Minister's Rules. The applicant claimed that the delegate failed to take the "mitigating factors" identified above at [13] into account when applying s 194(1)(g) of the Administration Act and r 46(3) of the Minister's Rules. 21 Sub-sections 194E(1)(g) and (k) of the Administration Act provide: (1) The Secretary must have regard to the following matters in determining whether a person is a fit and proper person for the purpose of paragraph 194C(b), (c) or (d) or 194D(c) or (d): … (g) the arrangements the person has: (i) to ensure the person complies with the family assistance law; and (ii) to ensure anyone the person is responsible for managing complies with the family assistance law; … (k) any other matter prescribed by the Minister's rules; … 22 For the purposes of s 194E(1)(k), r 46(3) of the Minister's Rules provides: The Secretary must have regard to the understanding that can be demonstrated by the provider or person with management or control, of the obligations that would apply under the family assistance law, and the level of commitment to complying with those obligations. 23 The matters in s 194E(1)(g) and r 46(3) were specifically considered by the delegate, namely the delegate did address the arrangements that the applicant had in place to ensure compliance with the family assistance law, the understanding that could be demonstrated by the applicant of his obligations under those laws and the level of the applicant's commitment to complying with those obligations. The delegate's reasons included the findings at [190] and [192] that the applicant had not demonstrated that he had instituted or could maintain effective governance arrangements to ensure compliance with the family assistance law, and the extent of the applicant's non-compliance did not give the delegate confidence that he had the ability to monitor and/or identify non-compliance. The claim that the delegate did not comply with s 194E(1)(g) of the Administration Act, or r 46(3) of the Minister's Rules is without foundation and rejected.

Ground 3 24 It was argued for the applicant that the delegate denied the applicant natural justice and failed to adhere to the requirements of the Administration Act by basing her decision on material that was credible, relevant, significant and adverse to the applicant, without informing the applicant that she had obtained that material and without giving the applicant an opportunity to respond. The material in question was as follows: (a) in assessing the applicant's response to the Sanction Notice, the delegate sought further information from an "educator" who had been engaged by the applicant to provide child care services (the educator information); (b) after issuing the Notice of Intention, the Department requested information from the Victorian State Regulatory Authority and was provided information about a compliance visit that occurred on 16 and 17 April 2019 (the April 2019 compliance visit information); and (c) in relation to the allegations about sessions of care being recorded in respect of educators who were overseas at the time the sessions of care were said to have occurred, in the applicant's submission, it was "apparent in the delegate's reasons" that the delegate had information as to the time the educators passed through Australian immigration (the immigration movement records information). 25 The educator information relates to a submission by the applicant in response to the child swapping allegation raised in the Sanction Notice. The applicant provided a document to the Department as evidence of an exceptional circumstance in respect of one of the educators engaged by Super Family Day Care, namely that she was required to work in other employment (not an approved family day care service) on the same day her child received care, which meant that she was exempted from child swapping provisions that would otherwise prevent her from being eligible for child care fee assistance. In her decision, the delegate stated that there were "anomalies" with the document the applicant provided, being a letter from the relevant educator's secondary employer substantiating the applicant's claim that the educator had worked at her second job on the day(s) in question. The decision recorded that the Department had contacted the author of the letter. On the basis of the information provided by the author of the letter, the delegate concluded that the applicant had provided a false and misleading document to the Department and "was reckless as to whether the document was false in any particular". The delegate considered that the provision of the false information was a serious matter and cast doubt on the veracity of all documents included in the submissions by the provider. The delegate took this into account in applying r 52(3) of the Minister's Rules and deciding to impose a sanction, and also in her assessment of whether the applicant was a fit and proper person to be involved in the administration of child care fee assistance. 26 The applicant claimed that he was denied natural justice because the educator information was not included in the Sanction Notice and the delegate did not otherwise inform him that she had obtained the information. Contrary to the submission for the applicant, there was no obligation to do so. The delegate's obligation under s 199A(1) of the Administration Act was to give the applicant notice of her intention to cancel his provider approval, setting out the grounds for doing so and summarising the evidence and other material on which those grounds were based. The delegate was also required to have regard to any submissions made by the applicant in accordance with an invitation under s 199A(1)(f) in deciding whether to cancel his provider approval. The delegate put to the applicant the matters she was required to put and took into account the applicant's submissions in response. Section 199A did not require the delegate to give the applicant the further opportunity to be heard on the findings she would make about the veracity of the documents that the applicant provided. 27 The April 2019 compliance visit information was obtained by the Department from the Victorian State Regulatory Authority after the Sanction Notice was given. The information related to a compliance visit by the Victorian State Regulatory Authority that it undertook at Super Family Day Care in April 2019, at which it identified further instances of non-compliance. The delegate stated that she found these further instances to be serious and that the applicant had not complied with the applicable requirements imposed by state law, which is a condition of continued approval. The applicant's complaint is that the delegate took this information into account without first putting it to the applicant for his response. However, the delegate did not have to do so under s 199A(1) of the Administration Act. The information relating to the April 2019 compliance visit did not raise a new case against the applicant, or matters extraneous to the matters raised by the delegate in the Sanction Notice, which included the delegate's consideration of, and concern regarding, information provided by the Victorian State Regulatory Authority in respect of earlier compliance visits. The applicant had already made submissions to the delegate on the compliance issues identified by Victorian State Regulatory Authority in earlier visits relating to the safety, health and well-being of the children being provided with care by Super Family Day Care. The applicant did not have to be given an opportunity to comment on the further adverse information. The information relating to the Victorian State Regulatory Authority's April 2019 visit and the non-compliance issues it identified was known to him at the time he addressed the issues raised by the delegate in the Sanction Notice and he had the opportunity to address the non-compliance issues identified by Victorian State Regulatory Authority and make appropriate submissions in response to the Sanction Notice. 28 Finally, the applicant also contends he was denied procedural fairness by reason that the delegate used immigration movement records to check whether she accepted the explanations given by the applicant in his statutory declaration with respect to the reports of care given when it appeared that the educators or children concerned were overseas, without putting those immigration records to the applicant. There was no obligation for the delegate to put the immigration movement records to the applicant because the applicant was already on notice about the relevant dates of departure and return by reason of the Sanction Notice and had the opportunity to make submissions in relation to those dates. The immigration movement records did not raise any new case against the applicant that the applicant was not given an opportunity to address and s 199A(1) of the Administration Act did not require the delegate to provide any further opportunity to the applicant to put submissions in response to the immigration movement records. 29 Even if the applicant was not afforded procedural fairness in respect of any of the three categories of material as alleged, any error has not been shown to be material to the delegate's decision in the sense that compliance could realistically have resulted in a different decision: Minister for Immigration and Border Protection v SZMTA [2019] HCA 3; 264 CLR 421 at 433 [2], 445 [45] and 445-6 [49] per Bell, Gageler and Keane JJ. Given the serious nature and extent of the applicant's non-compliance with conditions for continued approval of his provider approval, I am not satisfied that there is a realistic possibility that the delegate's decision could have been different, had the matters been put to the applicant for his further response.

CONCLUSION 30 Accordingly the application will be dismissed with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.