International Management Centres Association Ltd

Date 12 May 2004

Place Sydney

OVERSEAS EDUCATIONAL INSTITUTION - cancellation of Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registration - registered provider's obligation to refund course fees paid by students - registered provider remains liable for refund even when if students are issued with a Certificate of Enrolment from another institution - examination of the circumstances surrounding the transfer of students - held Applicant as registered provider was in breach of refund obligations - cancellation of registration appropriate - decision of the Respondent affirmed.

Education Services for Overseas Students Act 2000 ss 27, 28, 29, 83, 83(1), 93,176

Education Services for Overseas Students Regulations 2001

National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students

This is an application by International Management Centres Association Ltd ("IMCA (Australia)"), the Applicant, for a review of a decision of a delegate of the Department of Education, Science and Training ("the Department"), the Respondent, made on 2 October 2003 under s 83(1) of the Education Services for Overseas Students Act 2000 ("the ESOS Act") to cancel the registration of all courses conducted by IMCA (Australia). Mr John Wicks, the former Dean of IMCA (Australia), a director of IMCA (Australia) and member of its Governing Council, applied to be joined as a party to the proceedings pursuant to s 30 (1A) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") and the Tribunal ordered that he be joined.

At the hearing, the Applicant was represented by Mr Victor Wan, of Counsel, and the Respondent was represented by Mr Christopher Erskine, of Counsel. The documents before the Tribunal comprised the documents produced pursuant to s 37 of the AAT Act ("the T Documents") together with the documents tendered by the parties at the hearing. Oral evidence was given by Mr Wicks, Ms Jodie Diakiw and Mr Nabil Nasr.

The Applicant, IMCA (Australia) is an unlisted public company limited by guarantee, registered in Queensland. On 5 August 2003, there were three listed directors including Mr Wicks. The Articles of Association provide for the company to be managed by a Governing Council.

IMCA (Australia) is associated with International Management Centres Association ("IMCA (International)") which is based in Buckingham in the UK. IMCA (Australia) is, however, a separate and autonomous legal entity. IMCA (International) promotes the use of what it describes as an Action Learning approach whereby students "apply information sourced from the Internet and other literature and fieldwork to resolve real issues, or develop opportunities in their places of work" (T30). Higher education programs developed by IMCA (International) are taught internationally. Although IMCA (International) is self-accrediting, it also has external accreditation with the British Accreditation Council in the UK and the Distance Education and Training Council in Washington DC in the USA.

On 25 August 1997, IMCA (Australia) was registered on the Commonwealth Register of Institutions and Courses for Overseas Students ("CRICOS") as an "approved provider", pursuant to s 9 of the ESOS Act, to provide Master of Business Administration (MBA) and Master of Science (MSc) programs for overseas students in Queensland.

On 4 July 2000, IMCA (International) entered into an agreement with Intercollege Australia Pty Limited, trading as the Australian College of Technology (the "ACT") in Sydney, whereby the ACT provided the requisite teaching and program management for the program leading to the MBA which could be offered by the ACT in Australia, the People's Republic of China, Vietnam, Korea, Indonesia and Thailand (Ordinance 13 Partner's Programme Authorisation Agreement ("the Ordinance 13 Agreement") - T51). According to the Agreement, the ACT retained 65% of the program fees, with the other 35% to be remitted to IMC (Internet Action Learning) Ltd, a company based in the UK. IMCA (International) maintained quality control in respect of its programs through a requirement that all advisers and tutors for IMCA (International) accredited programs be approved by IMCA (International)'s Regional Dean and through supervision of assessment via external examiners and six monthly meetings of the Academic Board to review student progress.

In addition to being a Director of IMCA (Australia) and a member of the Governing Council, Mr Wicks was also the Regional Dean for IMCA (International) and Chair of its Regional Academic Board. As Regional Dean, he was responsible for academic matters including student welfare and advice and the conduct of assessment.

On 1 December 2000, Mr Wicks commenced employment with the ACT at its premises in Sydney, teaching into the IMCA (Australia) MBA programs, particularly in the Human Resources and Marketing subjects. Although it is not clear from the evidence before the Tribunal, it appears that IMCA (International) programs were taught at the ACT's premises in Sydney from early in 2001. The ACT also offered its own Graduate Certificate programs accredited by the New South Wales ("NSW") Vocational Education and Training Accreditation Board ("VETAB"). These Graduate Certificate programs could be undertaken in a year of full-time study and, on successful completion, students were permitted to enter into the second year of IMCA (International)'s MBA or MSc programs. According to Mr Wicks, in the years 2000 and 2001, the ACT recruited a total of about 450 students including both Graduate Certificate, MBA and MSc students.

Mr Wicks states that he first became aware of the need for IMCA (Australia) to be approved to operate in NSW in early 2001. On 8 June 2001, Mr Wicks sought advice from the NSW VETAB as to its requirements for recognition of IMCA (International)'s programs in NSW. On 17 September 2001, Mr Wicks wrote to the NSW VETAB applying for accreditation of existing IMCA (International) programs/courses.

On 8 March 2002, the Department issued IMCA (Australia) with a Notice, pursuant to s 93 of the ESOS Act, of its intention to suspend registration of IMCA (Australia) on the CRICOS. IMCA (Australia) was invited to make written submissions by 15 March 2002 (T27). On 14 March 2002, Mr Wicks made written submissions to the Department on behalf of IMCA (Australia).

On 5 May 2002, a delegate of the Minister decided to impose conditions on IMCA (Australia)'s CRICOS registration (T27). Condition 1 required IMCA (Australia) to not recruit or enrol any student in its MBA or MSc programs until and unless Education Queensland had inspected and approved its premises in Brisbane and certified that IMCA (Australia) complied with the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students.

Condition 2 required IMCA (Australia) on 6 May 2002, or as soon as possible thereafter, to give written notice to all students with a Confirmation of Enrolment ("CoE") for either its MBA or MSc programs stating that IMCA (Australia) had not been approved by the designated authority for NSW, was therefore not registered on the CRICOS for those programs in NSW and, accordingly, was unable to teach those courses in NSW. Although IMCA (Australia) was an approved provider in Queensland, IMCA (Australia) had been ordered not to deliver the programs in Queensland until its premises had been inspected and approved by Education Queensland and Education Queensland had certified IMCA (Australia)'s compliance with the National Code.

The notice was also required to state that students should make immediate arrangements to transfer into a comparable course with another institution registered on the CRICOS and advise the Department of Immigration and Multicultural and Indigenous Affairs of this, in order to comply with visa requirements. However, if IMCA (Australia) obtained the necessary approval and certification from Education Queensland, of which there was no certainty, then students could transfer to IMCA (Australia)'s Queensland campus and undertake their program there.

The delegate's letter to IMCA (Australia) dated 5 May 2002 also stated that IMCA (Australia) could apply to the Tribunal for a review of the decision. IMCA (Australia) did not do so. Instead, on 7 May 2002, IMCA (Australia) issued the required notice to its students. On 9 May 2002, Education Queensland approved IMCA (Australia)'s Brisbane premises and provided the required certification.

Following the students' receipt of IMCA (Australia)'s letter of 7 May 2002, in Mr Wicks' words, there was "chaos": the students were without approved programs, and they had potential visa problems and all sorts of other worries. On 16 May 2002, Michael Megas, the Academic Principal of the ACT, wrote to the students offering to enrol them in the ACT's approved and accredited Graduate Certificate as "a bridging solution".

On 27 June 2002, the President of IMCA (International), Dr Gordon Prestoungrange wrote to the Chief Executive Officer of the ACT, Mr Nabil Nasr, terminating the Ordinance 13 Agreement between IMCA (International) and the ACT (T37). Mr Wicks also wrote to Mr Nasr on that date confirming termination of the Agreement and stating that the effect of the termination was that the "ACT shall no longer recruit students to undertake IMCA programs, accept money from current students or prospective applicants, or represent IMCA in any form whatsoever" (T38).

On 11 July 2002, the delegate of the Department withdrew the two conditions imposed on IMCA (Australia)'s registration on the CRICOS. IMCA was then able to recruit and enrol overseas students to its programs in Queensland.

On 19 July 2002, Mr Megas sent notices to IMCA/ACT students due for refunds advising that refunds would be made on 31 July 2002. Mr Nasr stated that the plan was to pay for all the refunds out of money raised from the sale of the ACT's business to another educational provider, Garratt's Limited. However, when Garratt's renegotiated the price, there were insufficient funds to pay all the refunds, although some students did receive some money by way of refund. The ACT subsequently went into administration.

By letter dated 7 August 2002, the Department wrote to Mr Wicks concerning a complaint from an IMCA (Australia) student, Ms Dan Long, that IMCA had failed to refund a course fee of $17,000. The Department required evidence that IMCA had provided Ms Long with a refund and a statement explaining the refund by 6 September 2002. On 3 September 2002, Mr Wicks wrote to the Administrator of the ACT seeking advice on the ACT's paying this refund and also to the Department enclosing a copy of his letter to the Administrator. Further correspondence between Mr Wicks and the Department followed in which Mr Wicks noted that IMCA had not received any part of the fees paid by Ms Long.

There was also correspondence between the President of IMCA (International), Dr Prestoungrange and the Department about refunds for IMCA students in Sydney. Dr Prestoungrange denied any obligation on the part of IMCA to make refunds to students where IMCA had not received any funds in respect of those students (see, for example, T45, T46).

Ultimately, no resolution having been reached as to the refund of students, on 8 August 2003, a delegate of the Respondent notified the directors of IMCA (Australia) of an intention to make a decision to take action under s 83(1) of the ESOS Act to cancel IMCA's registration for all courses for Queensland, a notice issued pursuant to s 93 of the ESOS Act (T6). The Notice provided reasons for the proposed decision and all evidence that was relied upon in making the findings of fact. The Notice gave IMCA (Australia) until 14 August 2003 to make submissions to the delegate.

On 11 August 2003, Mr Wicks, on behalf of IMCA (Australia), wrote to the delegate of the Respondent requesting copies of all documents held by the Department which were relevant to the matter and requesting information pursuant to the Freedom of Information Act 1982 ("the FOI Act"). On 12 August 2003, the delegate advised Mr Wicks that the notice to IMCA (Australia) dated 8 August 2003 had provided copies of all evidence upon which the delegate had relied. The delegate also advised that any application for information under the FOI Act would require the consent of all students for the release of their personal information.

On 14 August 2003, IMCA (Australia)'s solicitor sought review of the delegate's decision to issue the s 93 Notice and, on 15 August 2003, Mr Wicks lodged an application for a review of this decision by the Tribunal. On 20 August 2003, the Department's lawyers advised IMCA (Australia)'s solicitor that the s 93 Notice is merely a notice of an intention to make a decision under s 83, giving the Applicant the opportunity to make submissions on the matter. On the same date, the Department advised the Tribunal that since the Notice was merely notice of an intention to make a decision, it was not a reviewable decision in accordance with the AAT Act.

On 27 August 2003, having heard the parties on the issue, the Tribunal decided that it had no jurisdiction because the matter in respect of which the Applicant sought a review was not a "decision" for the purposes of s 27(1) of the AAT Act. On 29 August 2003, the Applicant made written submissions to the Respondent in response to the s 93 Notice.

On 2 October 2003, a delegate of the Respondent decided that the Applicant had failed to comply with the s 29 of the ESOS Act on the ground that it had not refunded course money, and decided to cancel IMCA's CRICOS registration for all courses in Queensland.

On 2 October 2003, Mr Wicks lodged an application for a review of this decision by the Tribunal and an application for a Stay Order to be made pending the hearing of the substantive application. The Tribunal was not satisfied that the Applicant had made out the grounds for the issue of a Stay Order and did not grant this.

According to the Explanatory Memorandum for the Education Services for Overseas Students Bill 2000, the Act was:

designed to address the legitimate concerns that had been raised about some educational institutions that were dealing with overseas students. The Act was intended to protect provider and course quality through registration of institutions and to protect student funds held by providers.

The ESOS Act requires that educational institutions offering programs to overseas students must be registered to provide those programs in the States or Territories (s 8). Section 10 requires the Secretary to maintain a Register for the purposes of the Act called the Commonwealth Register of Institutions and Courses for Overseas Students ("CRICOS"). The designated authority for a State or Territory may recommend that an approved provider for that State or Territory be registered and should provide the designated authority with a certificate that the provider complies with the National Code (s 9). The National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students is made by the Minister pursuant to Part 4 of the Act. It is a disallowable instrument for the purposes of s 46A of the Acts Interpretation Act 1901. As stated, compliance with the National Code is a prerequisite for registration as an approved provider of programs to overseas students (s 9(2)(c)) and the Minister may impose sanctions for non-compliance (s 83(1)).

Section 83 states:

(1) The Minister may take one or more of the actions listed in subsection (3) against a registered provider if the Minister believes on reasonable grounds that the registered provider or an associate of the registered provider is breaching, or has breached, this Act, the national code or a condition of the provider's registration.

(2) The Minister may also take one or more of those actions against a registered provider for a course if the Minister believes on reasonable grounds that a provider that is providing the course with the registered provider is engaging, or has engaged, in misleading or deceptive conduct in connection with:

(a) the recruitment of overseas students or intending overseas students to the course; or

(b) the provision of the course to overseas students.

(3) The actions are:

(a) to impose one or more conditions on the registered provider's registration for any one or more courses for any one or more States (see section 86);

(b) to suspend the registered provider's registration for all courses for any one or more States (see section 95);

(c) to cancel the registered provider's registration for all courses for any one or more States.

Section 93 requires that the Minister must give the registered provider written notice of an intention to make a decision under s 83 and allowing the provider time to give the Minister written submissions.

The obligations of registered providers are set out in Part 3 of the ESOS Act. In particular, s 18 states:

If a registered provider for a course enters into an arrangement with one or more other providers to provide the course jointly, the arrangement must be such that the students pay their course money to the registered provider and not directly to the other providers.

Section 19 requires the registered provider to give the Secretary information about students in a form approved by the Secretary that may be electronic. The information and records required to be kept by providers are particularised in Division 3.1 of the Education Services for Overseas Students Regulations 2001. The Tribunal notes that the Department has established an electronic data base referred to as PRISMS (Provider Registration and International Students Management System). Individual registered providers are issued with passwords to enable them to access the system to provide required information about students.

Each registered provider is required to pay an annual contribution (s 24) to an Assurance Fund established pursuant to s 45 of the ESOS Act. The purpose of the Fund is to protect the interests of overseas students of registered providers, including the refund of course money if the provider cannot provide the courses for which the students have paid (s 46).

34.

Part 3 Division 2 of the ESOS Act deals with refunds of course money in the case of either provider or student default. In the case of provider default, refunds may be payable if, pursuant to s 27(1):

(a) the course does not start on the agreed starting day; or

(b) the course ceases to be provided at any time after it starts but before it is completed; or

(c) the course is not provided in full to the student because a sanction has been imposed on the registered provider under Part 6;

and the student has not withdrawn before the default day.

In the case of such provider default, s 29(1) states:

...the registered provider (or former registered provider) for the course must pay the student:

(a) the total of the course money the provider received in respect of the student before the default day; less

(b) the total of the prescribed amounts relating to expenses the provider incurred for the student for the course before the default day.

The prescribed amounts to be subtracted from the course money on a refund are dealt with in Regulation 3.19 of the 2001 Regulations.

With regard to course money received by the provider, paragraph 13.4 of the National Code is of particular relevance here:

13.4 Where more than one provider is involved in the provision of a CRICOS-registered course[1], only one of them shall be registered for that course on CRICOS. The Authority will decide which one will be registered, in light of its connection with and responsibility for the course. The registered provider will be held responsible under the ESOS Act 2000 for breaches of the Act or National Code, whatever the nature of its contractual or other arrangements with another provider. Arrangements for the provision of courses with another provider are to be approved as part of the registration process and any changes to these arrangements, or any new arrangements, during the period of registration must also be approved. Registration is not transferable.

FN7 For example, where one develops the curriculum and awards the qualification, and another delivers the tuition.

The term "Authority" is defined in Appendix 1 as meaning:

The person or body responsible under the law of a State or Territory for approving providers to provide courses to overseas students in that State or Territory.

Section 176 of the ESOS Act provides that an application may be made to the Tribunal for review of various decisions including a decision under s 83.

Mr Wicks provided affidavits dated 16 April 2004 (A1), 13 February 2004 (A2), 27 November 2003 (A3), 22 March 2004 (A4) and 29 October 2003 (A5). He said he was Dean of IMCA (International) for the Pacific Region between 2000 and 2003. As such, he was paid an honorarium to cover travel expenses incurred in attending two overseas conferences each year. He was not paid a wage. IMCA (Australia) was created as the registered office of the IMCA network in Australia. IMCA (Australia) was a semi-autonomous entity which was not empowered to sign documents for IMCA (International).

As a result of the Ordinance 13 Agreement (T51), the ACT was authorised to offer IMCA (International)'s MBA program in Australia. The Agreement was signed on behalf of IMCA (International) by IMCA (Australia) officers on the specific authorisation of IMCA (International) given by telephone from the UK.

From December 2000 until the collapse of the ACT in about July 2002, Mr Wicks was employed by the ACT to teach into the IMCA program run by the ACT at its premises in Sydney. He had an office at the ACT's Sydney premises where he also undertook work in his role as IMCA (International)'s Dean for the Pacific Region. This included giving student advice.

Mr Wicks was the person authorised to make entries on PRISMS in relation to students for IMCA (Australia), for which he had a password. Early on in his association with the ACT, Mr Wicks said he was instructed by Michael Megas, the Academic Principal of the ACT, that the Registrar of the ACT, Jodie Diakiw, should be his alternate for the purpose of entries on PRISMS so that Ms Diakiw would also be able to issue CoEs for IMCA programs. Mr Wicks therefore provided Ms Diakiw with his password although he asked to be kept informed of the CoEs being issued. Mr Wicks said Mr Megas held no position with IMCA (Australia) and had no authority to use IMCA (Australia) letterhead, even though he used this in a letter to students dated 19 July 2002 concerning student refunds (T48).

When IMCA (Australia) programs were first offered at the ACT premises in Sydney, Mr Wicks was not aware that this was in breach of the ESOS Act. It was only in about April 2001 that he realised this. Essentially, IMCA (International) relied on the local partner for the required regulatory compliance. When Mr Wicks realised that IMCA (Australia) was acting in breach of the ESOS Act, he discussed this with Mr Megas and told him that the ACT must stop conducting IMCA (Australia) programs. Mr Megas suggested that IMCA (Australia) students should be offered the Graduate Certificate program run by the ACT to rectify the situation.

With the regard to the list of 33 IMCA (Australia) students claiming a refund, supplied by the Department, Mr Wicks said that IMCA (International) had never received any course money from these students. The course money was paid to the ACT. However, Mr Wicks acknowledged that IMCA (Australia) subsequently lodged a proof of debt with the ACT administrator in respect of fees totalling $40,000. (Mr Wicks also lodged a personal proof of debt against the ACT in respect of $8,244.09 for unpaid wages (T67).)

Mr Wicks referred to a list of 33 IMCA (Australia) students he prepared from material summonsed from the Department. He said between 94% and 95% of those students were placed with other institutions. Some students also received partial refunds from Mr Nasr on an ad hoc basis. At least nine students had undertaken IMCA (Australia) courses in Queensland.

Mr Wicks said because IMCA (Australia) had not received any fees from the 33 students, he considered it had no obligation in respect of any refund. However, he acknowledged that IMCA (International) was entitled to 35% of the course fees under its Ordinance 13 Agreement with the ACT. At a meeting with departmental officers in Canberra, the International President, Dr Prestoungrange agreed that IMCA (International) had received $49,000 from the ACT under the Ordinance 13 Agreement but none of this money was in respect of the 33 students in question. In any event, this $49,000 had been expended on teaching materials etc.

Mr Wicks said IMCA (Australia) students who transferred into the ACT Graduate Certificate studied a slightly different syllabus for the last few months of the first year of their program. However, a student who completed the Graduate Certificate satisfactorily would still be given credit for half of the IMCA (Australia) MBA. There was a degree of commonality between subjects studied. Mr Wicks said he was familiar enough with the ACT Graduate Certificate to accept it as a pathway into the MBA, but he also discussed the accreditation of the Graduate Certificate with other members of IMCA (Australia)'s Academic Board. The syllabus for the Graduate Certificate was determined by the Australian National Training Authority and taught at various colleges. At the ACT, Mr Wicks assisted in marking for the Graduate Certificate program in Human Resources and Marketing subjects.

Mr Wicks was asked about the Department's Notice of 5 May 2002 imposing conditions on IMCA (Australia). He said the Notice was delivered to him personally at the ACT's Sydney premises. He would have sent other members of IMCA (Australia)'s Academic Board copies of the letter and phoned them later that day. He did not seek a review of the decision because he did not then understand what was involved. He did not consult solicitors. He did not think there was a choice: he thought they had to accept the decision. It did occur to him that IMCA (Australia) might be asked to refund course fees but, at that time, he thought the ACT would make the required refunds. However, when the Notice of Intention to cancel IMCA (Australia)'s registration was received in August 2003, Mr Wicks did consult lawyers because he thought there was a chance of having the decision overturned.

Mr Wicks said IMCA (Australia) currently has a shared office in Queensland. If its registration is restored, IMCA (Australia) will probably rent further premises in Queensland. Such premises are readily available in Brisbane.

Ms Diakiw commenced employment as Registrar of the ACT at the end of 1999. Although she was never employed by IMCA (Australia), she used to look after prospective students for IMCA (Australia)'s programs. She had access to the PRISMS system using Mr Wicks' password under instruction from Michael Megas because she was normally present at the ACT's premises during the day. Ms Diakiw acknowledged it is possible that someone else may have been given Mr Wicks' password when both she and Mr Wicks were absent to attend IMCA (International)'s Annual Congress in Switzerland.

Ms Diakiw said the ACT Graduate Certificate was equivalent to the first year of IMCA (Australia)'s MBA program. Students who transferred into the ACT Graduate Certificate would have been given an ACT CoE for one year and an overlapping IMCA CoE for two years. This would enable students to obtain a two year visa. Concurrent CoEs were issued on the instructions of Mr Megas, probably within a few days of 20 December 2001.

Mr Nasr was the Chief Executive Officer of the ACT and its Student Services Director. He said the ACT was approved by the NSW VETAB as a registered training organisation to provide certificate, diploma and graduate certificate courses.

Mr Nasr provided an affidavit dated 20 April 2004 (A13). He said he told Mr Wicks in July 2002 that the ACT intended to pay refunds to students from the money raised by the sale of the college to Garratt's Limited on 31 July 2002. However, as a result of what occurred between the ACT Administrator and Garratt's Limited, the price paid by Garratt's was significantly reduced - from over $1 million to $150,000, and the ACT could not afford to pay refunds to all students. Approximately 70% of all students received refunds but some received only partial refunds.

Mr Nasr contended that the Fund Manager paid some students the incorrect amount, failing to take into account the length of time the student had already studied. Moreover, some of the students failed to declare partial refunds received from the ACT.

The Applicant provided the Tribunal with a statement dated 15 March 2004 by Patricia James, the Registrar of IMCA (Australia) (A6), a statement dated 1 March 2004 from Professor Michael Marquardt (A8), a statement dated 3 March 2004 from Professor Peter Jones (A9), a statement dated 8 March 2004 from Professor Andrew Gonczi (A10), and an affidavit dated 16 April 2004 from Terry Mitchell (A11). Information was also provided about the ESOS Assurance Fund.

The Respondent provided the Tribunal with affidavits from Paul Zinkel, Assistant Director of the Department, dated 10 November 2002 (R5), Leighton Blackburn, Assistant Director of the Department, dated 13 November 2003 (R6) and 31 March 2004 (R8), and Charles Whiting, the Department's in-house solicitor with carriage of this matter, dated 24 November 2003 (R7). The Tribunal also had before it four volumes of T Documents, including Supplementary T documents.

Mr Wan, for the Applicant, contended that the circumstances surrounding the refund claims of the particular students in question are relevant to how the refund obligations were said to have arisen. These were caused by the collapse of the ACT, which in turn was caused by the issue of IMCA's letter to students dated 7 May 2002 on the instructions of the Department. The letter contained false and misleading information which caused panic among students, affecting adversely the ACT's reputation and causing enrolments to nosedive.

Mr Wan contended that the Department should have consulted with IMCA (Australia) before issuing the Notice on 5 May 2002. IMCA (Australia) could have arranged an inspection of its Queensland premises by Education Queensland within a couple of days, as they were subsequently able to do.

Mr Wan said over 90% of the affected students were promptly placed with various other registered providers. One student had completed the course. Others received partial refunds. Some students transferred to IMCA (Australia)'s Queensland campus. Thus, there are real doubts about whether all the students were entitled to a refund. Mr Wan submitted that there had been an inadequate and defective refund process and account had not been taken of the "prescribed amounts relating to expenses" (s 29(1)(b)) properly incurred, as provided for in the Regulations.

In relation to s 29 of the ESOS Act, Mr Wan submitted that the obligation to refund course fees to a student only arises if the registered provider has received course money. Words such as "refund", "pay" and "receive" should be given their ordinary meaning. To refund a sum of money to a person assumes that the person making the refund must first have received it. IMCA (Australia) never received course money for the 33 students in question.

With regard to the Minister's power under s 83, Mr Wan emphasised its discretionary nature and the requirement that the actions listed in subsection (3) can only be taken "if the Minister believes on reasonable grounds" that there has been a breach (s 83(1)). Thus, reference must be made to the surrounding circumstances to determine what is reasonable. In this case, there were other options available to the Department that would have achieved a better result in terms of student welfare. He submitted that the Minister's action was so unreasonable that no reasonable decision-maker acting according to law could have taken such action (Wednesbury unreasonableness).

Mr Erskine, for the Respondent, submitted that each of the 33 students in question (R9) was enrolled in an IMCA (Australia) course and issued with an IMCA (Australia) CoE: IMCA (Australia) was the registered provider for the students' courses. Pursuant to s 29(1), IMCA (Australia) therefore had an obligation to refund course fees to the students. In the case of students subsequently enrolled in ACT courses, for example in a Graduate Certificate, the student was issued with a further CoE by the ACT.

Mr Erskine noted that the term "course money" is defined in s 7(1) of the ESOS Act as meaning "money a provider receives, directly or indirectly". Thus, if it can be shown that IMCA (Australia) received course money indirectly, then it has an obligation to refund the students. Paragraph 13.4 of the National Code states that where more than one provider is involved in the provision of a CRICOS-registered course, only one of them shall be registered for that course on CRICOS. The provider registered in respect of a course will be held responsible for breaches of the ESOS Act or National Code, whatever the nature of the provider's contractual or other arrangements with another provider. The example given in Footnote 7, where one provider develops the curriculum and awards the qualification while another delivers the tuition, is exactly the case in point.

Mr Erskine said there is ample evidence of a close working relationship between IMCA (Australia) and the ACT. Essentially, for the purposes of the ESOS Act, the ACT was acting as IMCA (Australia)'s agent in promoting IMCA courses, recruiting students and delivering tuition. Under the Ordinance 13 Agreement (T51), IMCA (International) was entitled to 35% of the course fees and the ACT to 65% of the fees. Moreover, IMCA (Australia) lodged a proof of debt with the ACT's Administrators in respect of course fees owed to IMCA (International).

Other evidence of the close relationship between IMCA (Australia) and the ACT includes IMCA (Australia)'s use of the ACT's premises in Sydney, the Registrar of the ACT, Ms Diakiw's use of Mr Wicks' password to access the PRISMS system, and Mr Megas, the Academic Principal of the ACT, writing to students on IMCA (Australia) letterhead.

Thus, Mr Erskine submitted that the ACT received course fees for courses for which IMCA (Australia) was the registered provider as IMCA (Australia)'s agent.

Mr Erskine contended that the transfer of the students to the ACT's Graduate Certificate and the issuing of an ACT CoE, was essentially a sham to get around the requirements of the ESOS Act and enable the course to be offered in NSW. What was an MBA course one day, was a Graduate Certificate course the next.

Mr Erskine said that for nearly two years there has been a blatant failure by IMCA (Australia) for to comply with its s 29 obligation to refund course fees to the students. In terms of the appropriate sanction for such a failure under s 83, Mr Erskine pointed to a number of relevant considerations: the significant public interest in safeguarding a viable and reputable higher education system; whether the institution has acknowledged the breach - even the President of IMCA (International), Dr Prestoungrange has failed to recognise IMCA's obligations; the inadequacy of IMCA (Australia)'s record keeping; the decision not to consult solicitors in May 2002; the impression that IMCA (Australia) is not an organisation in which one could have confidence.

Mr Erskine submitted that there are reasonable grounds to conclude that IMCA (Australia) breached s 29 of the ESOS Act and the National Code and, given its failure to recognise its obligations and to make redress, the appropriate sanction under s 83(3) is cancellation of its CRICOS registration.

Mr Erskine said much of the case put forward by the Applicant is irrelevant. The case is not about: the collapse of the ACT; the conditions imposed in May 2002 in respect of which no review was sought; the distress of the students, although the Respondent recognises this distress and points out that it was caused by the continued failure of IMCA (Australia) to refund their fees; the Fund Manager's decisions; student default refunds; or the students' ability to enrol in other courses.

The role of the Tribunal is to review the decision of the Minister's delegate made pursuant to s 83 of the ESOS Act to cancel IMCA (Australia)'s CRICOS registration. It is clear from the wording of s 83(1) that this is a discretionary power exercisable if the Minister, or in this case the Tribunal standing in the shoes of the Minister, believes on reasonable grounds that the registered provider is breaching, or has breached, the ESOS Act or National Code or a condition of the provider's registration.

In the case of IMCA (Australia), the principal allegation is that it has breached the Act by failing to refund course fees to students pursuant to it obligations under s 29. The Tribunal finds that the situation in which IMCA (Australia) finds itself arose as a result of its committing an offence under s 8 of the ESOS Act, in that it provided a course to overseas students in NSW without being registered to provide that course in NSW. Its CRICOS registration was confined to Queensland.

The Tribunal finds that IMCA (International) entered into an Ordinance 13 Agreement with the ACT on 4 July 2000 for the ACT to provide the requisite tuition and program management for the program leading to the award of IMCA's MBA. Under the Ordinance 13 Agreement, IMCA (International) was entitled to 35% of the course fees and the ACT to 65%. Although IMCA (Australia), apparently acting on behalf of IMCA (International), contends that it never received any part of the course fees in respect of the 33 students who sought refunds from IMCA (Australia), nevertheless, the President of IMCA (International), Dr Prestoungrange, in a letter to the Department dated 19 November 2002 (T40), acknowledged that:

Some $A49,000 was indirectly received in respect of Associates (students) by IMCA as the Provider. All these funds and more have been deployed in Brisbane to ensure the teach out of all Associates who relocated there earlier this year ...

The Tribunal finds that between December 2000, when Mr Wicks commenced his employment with the ACT, and the termination of IMCA (International)'s Ordinance 13 Agreement with the ACT on 27 June 2002, there was a close working relationship between IMCA (Australia) and the ACT. Mr Wicks was provided with an office at the ACT premises in Sydney and performed his IMCA related functions from that office, assisted by personnel employed by the ACT such as the Registrar Jodie Diakiw, and with the benefit of the ACT's facilities. The evidence as to the relationship supports a finding that the ACT was essentially acting as the agent of IMCA (Australia) in relation to the collection of course fees.

As a result of the Department's intervention by Notice to IMCA (Australia) dated 5 May 2002, IMCA (Australia) ceased to provide its MBA and MSc programs in NSW. This clearly constitutes a "provider default" in terms of s 27(1) of the ESOS Act. As a result, IMCA (Australia) had an obligation under s 29(1) to pay the affected students "the total of the course money the provider received in respect of the student" less "the total of the prescribed amounts relating to expenses".

As Mr Erskine pointed out, "course money" is defined in s 7(1) as meaning money received "directly or indirectly". The Tribunal rejects the Applicant's argument that IMCA (Australia) did not receive course money in respect of the students. It is clear that the course money was paid to IMCA (Australia)'s agent, the ACT, who were entitled to a 65% share in accordance with the terms of the Ordinance 13 Agreement with IMCA (International). The other 35% was payable to IMCA (International) through its affiliate IMCA (Australia) which was the registered provider.

Moreover, the Tribunal notes paragraph 13.4 of the National Code which makes IMCA (Australia), as the registered provider, responsible for breaches of the Act or Code whatever the contractual arrangements with the ACT.

IMCA (Australia) has refused to pay refunds to the 33 students - so has IMCA (International). IMCA (Australia) is therefore in breach of its obligations under the ESOS Act. The s 83(1) requirement for the Minister to believe on reasonable grounds that the registered provider has breached the ESOS Act is thus satisfied. What then is the appropriate sanction under s 83(3)? The Minister may take one or more of the actions listed there:

(a) to impose one or more conditions on the registered provider's registration...;

(b) to suspend the registered provider's registration ...; or

(c) to cancel the registered provider's registration...

IMCA (Australia) was registered to provide MBA and MSc programs in Queensland. On 5 May 2002, conditions were imposed on its registration by the Department in respect of its breach of the ESOS Act by offering those programs in NSW when it was not registered to do so. Those conditions were subsequently lifted on 11 July 2002, IMCA (Australia) having complied.

IMCA (Australia)'s obligation to refund course fees to students in NSW arose on 5 May 2002. Despite correspondence between IMCA (Australia), IMCA (International) and the Department over a period of about a year, IMCA adamantly refused to comply, denying the existence of that obligation. Ultimately, the Department gave notice of its intention to take action under s 83(1) to cancel IMCA (Australia)'s CRICOS registration on 8 August 2003.

In his submissions, Mr Erskine pointed to a number of matters relevant to a consideration of what form of sanction was appropriate. It is a matter of public knowledge that income earned from the sale of educational services to overseas students makes a significant contribution to the Australian economy. Clearly, to safeguard ongoing income from this source and those involved in educational services whether as providers or recipients, it is necessary to have a regulatory framework in place to ensure the quality of the educational services provided and to protect student funds. All this is apparent from the Explanatory Memorandum for the Bill which preceded the ESOS Act, referred to in paragraph 27, above.

The Tribunal also notes that the Applicant has adamantly refused over a significant period to recognise its clear obligation under the ESOS Act to refund relevant students. While the Tribunal recognises that the Applicant has concerns over the entitlement of some of the 33 students to refunds from the ESOS Assurance Fund, it is not the role of the Tribunal to determine to whom refunds are due and of how much. The Tribunal's focus is a breach of IMCA (Australia)'s obligations under the ESOS Act and the appropriate sanction.

The Tribunal also has concerns over the quality of IMCA (Australia)'s record keeping and more generally as to its operation as a whole. The documents provided to the Tribunal indicate that IMCA (Australia)'s paper trail was anything but clear and it was apparent that few resources were dedicated to challenging the decision under review by the Tribunal other than those provided by Mr Wicks personally, who also undertook much of the preparatory work with some assistance from his solicitor and Counsel. The impression gained by the Tribunal was not that of an organisation which claims to be "a global association of professional managers" (T30).

In the Tribunal's opinion, the action taken by the Minister under s 83(1) of the ESOS Act to cancel IMCA (Australia)'s registration was entirely appropriate given the imposition of conditions for the earlier breach of the ESOS Act and the adamant and outright refusal to recognise its obligations and provide refunds of course fees to students. The Tribunal therefore affirms the decision under review.

I certify that the 83 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President

Signed: .....................................................................................

Associate

Date/s of Hearing 19, 20 and 21 April 2004

Date of Decision 12 May 2004

Counsel for the Applicant Mr V Wan

Solicitors for the Applicant GOH Lawyers (Mr F Ngo)

Counsel for the Respondent Mr C Erskine

Solicitors for the Respondent DEST Legal Group (Mr C Whiting)