Should the Court make an order until the determination of the appeal staying the Tribunal's decision?
54 Other than the preliminary matters to which I referred above, on the hearing of the current application, as with the application for the interim stay, there was no substantial dispute as to the principles to be applied. I referred to those principles in the interim decision at [43]-[44], and at [60] I applied like reasoning to that of Tamberlin J in Shi v Migration Institute of Australia Ltd [2003] FCA 1304; 134 FCR 326 at [28]-[29] in holding that the applicant's business as a going concern was a continuum that ought not be interrupted pending a full hearing of the applicant's application for a stay pending the determination of the appeal.
55 Counsel for the respondent accepted in oral argument that by its notice of appeal the applicant had raised grounds of appeal relating to questions of law that were worthy of argument. Counsel for the applicant characterised the argument in relation to one ground of appeal as strong, while counsel for the respondent submitted in writing that there was very little merit in the appeal. Neither submission was developed, so I will act on the accepted position that the grounds of appeal are worthy of argument.
56 The applicant maintained, as it had on the application for an interim stay, that a stay of the Tribunal's decision should be given for the reasons to which I referred in the interim decision at [47]-[55], and which I shall not repeat.
57 I have dealt with the respondent's submissions about the effect of the Tribunal's order of 7 January 2021. Other than that, the strong focus of the submissions of counsel for the respondent was to point to the applicant's non-compliance with applicable statutory requirements as a reason why, in the public interest, the Court should not stay the Tribunal's decision so as to permit the applicant to continue to operate. These submissions had substance to them. In evaluating the respondent's submissions, I shall differentiate between those breaches that were the subject of the Tribunal's findings, and other breaches that were the subject of evidence before the Court.
58 As to the Tribunal's findings, I referred to them in the interim decision at [34]-[37]. There are two features of the Tribunal's findings that are relevant for present purposes. The first is that in relation to the applicant's registration under the NVR Act (which is not a subject of this appeal) the Tribunal found that there had been systemic failures and contraventions of the relevant standards that were "quite fundamental to the scheme of accreditation that has been established by the NVR Act." Yet the Tribunal determined to set aside the respondent's decision refusing renewal of registration under the NVR Act and to substitute a decision by which the applicant's registration was renewed for a period of three years, but subject to conditions. The reason I mention this is that past breaches by the applicant, even of a substantial nature, did not preclude a conditional renewal of registration under the NVR Act. This forms one of the foundations for the applicant's appeal to the Court, in that the applicant claims that the Tribunal unreasonably failed to consider renewing its registration under the ESOS Act in a like manner, that is, subject to conditions.
59 The second feature of the Tribunal's decision is its findings at [204] of its reasons that at the heart of most of the breaches of the ESOS Act lay a lack of proper assessment tools and a lack of monitoring. Significantly, the Tribunal also found that it was satisfied that the applicant had, for the most part, addressed the assessment tools. The reason the Tribunal did not regard this as a sufficient ground to renew the applicant's registration under the ESOS Act was that it was not satisfied that the applicant would comply with the ESOS Act and the relevant code into the future. Relevant to that finding was the Tribunal's assessment of the applicant's history of non-compliance and the scope of work that had to be undertaken by the applicant's consultant, Ms Hodge of RTO Advice Group. On the appeal, the applicant contends that this aspect of the Tribunal's decision was affected by an error or law, in that it is claims that the Tribunal asked itself the wrong question by considering whether the applicant will comply with the ESOS Act and the relevant code, and that the correct question was limited to whether the applicant was complying with the statutory requirements.
60 The point of drawing attention to these features of the Tribunal's reasons is that on the applicant's case, its past contraventions of the legislation should not preclude renewal of its registration by the Tribunal, and that the Tribunal's decision to decide otherwise was affected by an error of law that might be, but does not need to be, characterised as jurisdictional in nature.
61 I shall now turn to the evidence before the Court relating to the applicant's non-compliance with statutory requirements.
62 Before the Court were affidavits filed on behalf of the applicant, being two affidavits of Mr Dhawan, the CEO of the applicant, an affidavit of the applicant's solicitor, and an affidavit of Ms Hodge, an RTO Consultant to whom I have already made reference. At the hearing of the application, pursuant to leave counsel for the respondent cross-examined Mr Dhawan about his evidence in relation to uploading information to the PRISMS system in relation to students who apparently had not paid fees but who were recorded in the PRISMS system as having paid at least part of the tuition fees. That cross-examination occurred on Microsoft Teams, where counsel was present in Court in Melbourne, and the witness was situated in Perth in an informal setting using a laptop computer. I found that the cross-examination of this particular witness using Microsoft Teams was not ideal, but it was the best that could be achieved in the circumstances.
63 The respondent relied on affidavits of Ms Owen, a Stakeholder Coordinator of the respondent, and Mr Mahajan, Director of Tuition Protection Service. By the respondent's evidence, various instances of the applicant's non-compliance with ESOS Act obligations were alleged, some accepted and others disputed by the applicant. It was undisputed between the parties that the applicant gave false or misleading information in two categories, in breach of s 108 of the ESOS Act.
64 First, Ms Owen identified 184 students in respect of whom "misleading" information was entered into PRISMS by the applicant between 10 and 30 December 2020. The applicant caused the students' PRISMS records to be amended as though their details or the details of their studies had changed, when in fact, Ms Owen identified that the students' studies had been terminated. The ESOS Act contains additional reporting obligation upon termination of studies, which obligations, Ms Owen concluded, were not complied with. Mr Dhawan accepted in his affidavit evidence that he decided that the students would be terminated following the Tribunal's decision, and during cross-examination, he accepted that the applicant terminated enrolments between 10 and 30 December 2020, but could not confirm whether there were 184 terminations. In his affidavit dated 19 February 2021, Mr Dhawan sought to explain the entries as having been made in December 2020 in an environment of uncertainty about the future of the applicant's business. I must say that Mr Dhawan's explanation about what the applicant did is not altogether clear to me. At [13] of his affidavit Mr Dhawan concluded his explanation as follows -
I am not sure if that was the best way to approach the difficulty I faced in late December last year, having been notified of a negative decision by the Tribunal, not knowing if the Applicant could appeal and being concerned to ensure that the Applicant complied with all its obligations under the Act and to the [Tuition Protection Service], as well as to its students. In acting the way I did, I believe I acted to the detriment of the Applicant in order to ensure it remained compliant with its legal obligations, it assisted the [Tuition Protection Service] and it protected the students it had enrolled.
65 Second, Ms Owen identified 84 students in respect of whom the applicant had recorded in the PRISMS records as having received at least partial payment of tuition fees. Separately, in response to a notice issued to the applicant under s 113 of the ESOS Act requesting information, the applicant stated that it had not received any such money, which was identified in Mr Mahajan's evidence. Ms Owen concluded that the applicant's entries in relation to these 84 students appeared to be false and misleading. Mr Dhawan accepted that the entries were false. During cross-examination, Mr Dhawan also accepted that he had given his PRISMS login details to other staff of the applicant. Counsel for the respondent submitted that doing so contravened the PRISMS User Guide. In relation to those entries Mr Dhawan stated in his affidavit -
19. The students listed in Annexure E are from Karachi in Pakistan, which had also suffered severe flooding and is also suffering from the effects of the Covid-19 pandemic. As a result of the uncertainty caused by all these factors, education agents have been reluctant to make the payment for the prepaid component of the tuition fee until the student received the visa and is confident he or she can come to Australia and commence their qualification with us.
20. As I established with the education agent that the student had the money, I recorded the amount of the prepaid component of the tuition fee as paid because I was satisfied the funds were available and would be paid upon the visa being granted.
21. I did not believe that I was providing false or misleading information in relation to any of the instances referred to in parts 2 or 3 in Ms Owen's affidavit and the students referred to in Annexures D and E. In relation to Annexure D, I thought I was doing the right thing by the students and by the [Tuition Protection Service] in the circumstances in which the Applicant found itself around Christmas last year. In relation to the students referred to in Annexure E, I was noting on PRISMS the proportion of the tuition fee which was the prepaid component and which I was satisfied would be prepaid upon the visa being issued and I did not believe that by completing the PRISMS record as I did amounted to providing false or misleading information.
66 Mr Mahajan identified a course of alleged non-compliance with notices that he caused to be issued to the applicant under s 113 of the ESOS Act, requesting certain information including explanations for the 84 students for whom false payment entries were made in PRISMS. That alleged non-compliance comprised late and deficient responses to the notices, and in some cases failure to respond at all. Mr Dhawan accepted Mr Mahajan's description of the communications.
67 There are other instances of alleged non-compliance which are disputed by the parties.
68 First, Ms Owen's evidence was that the applicant had failed to comply with reporting obligations. Ms Owen analysed data for the period 28 February 2020 to 4 February 2021. Ms Hodge, in response, proposed that Ms Owen's inclusion of data from 28 February to 17 July 2020 in her review negatively skewed the analysis. Ms Hodge claimed to have assisted the applicant from 17 July 2020 to review its PRISMS reporting processes and practices, and concluded that inclusion of data prior to 17 July 2020 overlooked the improvements made by the applicant since that date.
69 Second, Ms Owen alleged that the applicant failed to report students' non-commencement of studies within the acceptable period on 28 occasions between 28 February 2020 and 4 February 2021, in breach of s 19(1)(c) of the ESOS Act. In response, Ms Hodge claimed that between 17 July 2020 and 7 February 2021, there were only four students whose non-commencement of studies was reported late. The applicant provided explanations for this late reporting: in respect of two students, they were not granted visas in the first place and so were offshore; in respect of one student, the last permitted reporting day fell on a Friday but staff of the applicant do not work on Fridays, so the reporting occurred "immediately" on the following Monday; and in respect of one student, it was explained that, by an administrative error, two identical entries existed for one student and the erroneous entry was identified, reported, and the error rectified.
70 Third, Ms Owen alleged that the applicant failed to report termination of students' studies within the acceptable period on three occasions between 28 February 2020 and 4 February 2021, in breach of s 19(1)(d) of the ESOS Act. In response, Ms Hodge identified the same three students between 17 July 2020 and 7 February 2021 whose termination of studies was reported late. Ms Hodge surmised that these late reports were caused by the erroneous entry of the last day of study as the date of termination. She noted that the PRISMS User Guide does not provide guidance on how to determine the date of termination. She also noted that Ms Owen's analysis failed to identify that for at least two of the three students, it should have been clear that the date of termination would not usually be the student's last day of study. With respect to the third student, Ms Hodge explained that the reporting time was justified because the student had requested an extension of time to finish the course, and subsequently requested a release from the applicant. The applicant, according to Ms Hodge's evidence, reported the termination upon finalising the release request. That led Ms Hodge to conclude that, in fact, there had been no breaches in this respect.
71 Fourth, Ms Owen alleged that the applicant failed to report students' breach of visa condition 8202, being unsatisfactory progress, as soon as practicable on 19 occasions between 28 February 2020 and 4 February 2021, in breach of s 19(2) of the ESOS Act. Ms Hodge was critical of Ms Owen's method. Ms Hodge stated that Ms Owen would have required the date of termination of those identified students to calculate the reporting date. Ms Hodge identified five students whose records did not have a termination date and in respect of whom Ms Owen incorrectly used the last day of study to measure the reporting period. Ms Hodge concluded that reporting occurred on or near the date of termination with those students, such that there were "no issues" with the applicant's reporting.
72 In the interim decision at [58] I stated that the question whether an interim stay should be granted, and if so its terms, was not free from difficulty, and it remains the case that the question whether the Court should stay the Tribunal's decision on terms that would permit the applicant to continue to operate its business is not free from difficulty. I am particularly troubled by the evidence of false entries relating to 84 students in the PRISMS system when set against the background of the history of non-compliance detailed in the Tribunal's reasons. However, I consider that the correct approach to these difficulties in the special circumstances of this case is as follows.
73 Upon an application to stay the decision of the Tribunal, the Court may properly take into account the public interest in having the applicant comply with relevant legislative requirements. I am mindful of that consideration. However, in assessing the relevance of the applicant's past non-compliance, and the prospect that there may be non-compliance in the future, there are two important considerations. The first is that this Court is concerned with the legality of the Tribunal's decision, and within certain boundaries the Court is not concerned with the merits of the applicant's application for renewal of its registration under the ESOS Act. As Bromwich J stated in Australian International College Pty Ltd v Australian Skills Quality Authority [2018] FCA 2097 at [3] in an allied context, "this Court cannot (and will not) conduct a de facto merits review of ASQA's cancellation decisions". The second point flows from the first. The Court does not have all the evidence that the Tribunal had before it, nor the benefit of seeing witnesses who, on a merits review, may give more comprehensive evidence than they have given on this application, and who may be challenged in a more complete way in cross-examination. There is a danger that in an application for a stay of the Tribunal's decision, the fate of the applicant might be determined in a summary way without the benefit of all the evidence and full argument that may occur on a merits review by the Tribunal, which is the body charged with that function.
74 With these observations in mind, I shall address the evidence of the applicant's non-compliance in three categories. The first category is the Tribunal's findings to which I referred at [58]-[60] above. By themselves, I give those findings little weight as a reason for refusing the applicant's application for a stay, because the applicant's claim is that despite those findings the Tribunal made legal errors in arriving at its decision.
75 The second category is the evidence of non-compliance that was not disputed to which I referred at [64]-[66]. Mr Dhawan proffered explanations for these instances of non-compliance. I do not consider that it is appropriate that I should act on what could only be preliminary views about those explanations on an interlocutory application with only brief and limited cross-examination of Mr Dhawan on a Microsoft Teams video link.
76 The third category is the evidence about issues that are the subject of dispute to which I referred at [67]-[71] above. It is not appropriate that I evaluate the competing evidence about those issues on this application.
77 The appeal in this proceeding has been able to be expedited as a result of another matter being re-fixed for hearing, and the date of 19 April 2021 has become available. The short time between the determination of the application for a stay, and the hearing of the appeal is a matter that I take into account as favouring the grant of a stay of some sort. If the applicant succeeds in its appeal on either question of law that it has framed in its notice of appeal, then it would be open to the Court to set aside the Tribunal's decision and to remit the matter for re-hearing by the Tribunal according to law. The terms of any re-hearing would be a matter to be determined. On the assumption that the Tribunal's decision is set aside ab initio for error of law, then there would be the prospect that the applicant will be restored to the position that it was in immediately prior to the Tribunal's decision of 10 December 2020, namely that it could continue to operate its business pursuant to the unconditional stay ordered by the Tribunal on 7 June 2017. That would be subject to any further order that the Tribunal might make pursuant to s 41(3) of the AAT Act varying or revoking the stay.
78 For the above reasons, balanced against the other considerations to which I refer below, I do not consider that the evidence of the applicant's non-compliance with statutory requirements is a matter that should carry such weight as to lead me to refuse the application for a stay of the Tribunal's decision and the underlying decision of the respondent.
79 The next question is the terms on which any stay should be given. Here, there are different interests that should be addressed and balanced.
80 In the interim decision, I referred to the interests of the applicant in maintaining its business as a going concern so that if the appeal were to be allowed and the Tribunal's decision set aside, the effectiveness of the hearing and determination of the appeal is secured. The ability of the applicant to continue its business is the subject matter of the appeal. In the interim decision I referred at [47] to the evidence of the applicant's circumstances. Of particular importance are the following considerations, which for the purposes of this application I am prepared generally to accept, and to which I give weight -
(a) if the Court does not stay the Tribunal's decision, then the applicant will cease to be able to operate as a provider of training and education to international students, and will be required to make arrangements under the ESOS Act to transfer all of its students to another provider or to provide refunds of unspent tuition fees;
(b) the applicant would then effectively have to cease operating as a business, and will have to lay off staff and it will lose its premises;
(c) the applicant does not have any accumulated cash reserves, and has operated under financial "duress" for a number of years pending a decision by the Tribunal, as it was difficult to operate a business without certainty of registration;
(d) the applicant spent significant funds in the last 12 months in connection with the review by the Tribunal after the respondent lodged its further evidence;
(e) the applicant has experienced additional difficulties in the international student market in the last 12 months as a result of COVID-19 restrictions on international arrivals; and
(f) in summary, the applicant would be unable to survive if it was not permitted to operate pending the hearing and determination of the appeal.
81 The respondent was critical of the quality of some of the evidence about the applicant's financial circumstances. However, the main point that I consider to be important is that I accept that there is a connection between the applicant's ability to continue trading as a provider of educational services to international students and the maintenance of the applicant's business as a going concern. This is the "continuum" to which I referred at [60] of the interim decision.
82 The interests of students who are enrolled or who may be enrolled is to be taken into consideration. There are three categories of students that I shall identify. The first is those students who have enrolled and who have already commenced a course offered by the applicant. By the terms of the interim stay order made on 29 January 2021, the applicant was permitted to recommence the delivery of courses to those students. The second group of students is those who have enrolled but who have yet to commence a course. The terms of the interim stay did not permit the applicant to commence teaching those students, and at the time counsel for the applicant informed the Court that there were no students who were due to commence a course during the period of the interim stay. The third group is those students who might enrol for a course. The terms of the interim stay permitted the applicant to continue to accept enrolments.
83 The third interest that is to be accommodated is the public interest that is represented by the respondent, which has sought over a period of years to secure the applicant's compliance with the relevant legislation.
84 The applicant's primary position on this application is that the Court should stay the Tribunal's decision, and the decision of the respondent that was subject to review, without any limitations. The applicant's alternate position was that the stay in the terms ordered on 29 January 2021 should be continued. The applicant pointed to the fact that over a relatively short period of time the applicant has been the subject of stays on three different sets of terms: (1) an unconditional stay that was ordered by the Tribunal on 7 June 2017 that ceased to have effect on 7 January 2021; (2) the Tribunal's conditional stay that was ordered on 7 January 2021; and (3) the limited terms of the interim stay ordered by the Court on an urgent basis on 29 January 2021.
85 The respondent's primary position is that there should now be no stay. For the reasons that I have given above relating to the effect of the Tribunal's order of 7 January 2021, the power of the Court to make an order under s 44A(2) with retrospective operation, and my disinclination to treat the evidence about the applicant's non-compliance as disentitling it to the benefit of a stay, I am not inclined to accept the respondent's primary submission. In the alternative, the respondent submitted that any stay should be the subject of conditions. The conditions that the respondent proposed were as follows -
From the date of this order (separate to any other obligations under the Education Services for Overseas Students Act 2000 (ESOS Act)), the applicant must:
a. Within 2 days, ensure that all entries relating to students or potential students of the applicant are accurate and complete within the computer system referred to at s 109 of the ESOS Act, known as 'PRISMS'.
b. Not enrol or take any steps to enrol any current or potential student in a course or a part of a course under the ESOS Act.
c. Not commence any current or potential student enrolled in a course or a part of a course under the ESOS Act. For the avoidance of doubt, students who are in Australia and who have enrolled in, and have commenced a course (or a part of a course) with the applicant on a date prior to the date of this order (current students) may continue to completion of that specific course (or part of a course) only where they commenced prior to the date of this order. However, the applicant may not enrol a current student in any new or further course or allow a current student to commence any new or further course, or part of a course.
d. In respect of any student already enrolled, but yet to commence his or her first course with the applicant (subject students): (1) advise subject students in writing that they cannot commence a course or a part of a course with the applicant until further order of the Federal Court of Australia, (2) not demand payment from a subject student (3) provide refunds to subject students when requested, and (4) if a student seeks to transfer to another provider, the applicant must, in accordance with the National Code made under the ESOS Act, release the student seeking the transfer provided that the student owes no outstanding monies (fees) to the applicant for completed units, (5) provide ASQA with copies of all written notifications to students made under (1), clearly identifying each individual student and the date and method by which the communication was sent, (6) within 5 days of the date of this order, amend its Overseas Student Transfer Policy and Procedure (required by Standard 7.2 of the National Code) and provide a copy of the amended policy to ASQA, so that the policy permits students to transfer to another provider where the student owes no outstanding monies (fees) in relation to completed units.
86 I am not attracted to the conditions proposed by the respondent for a number of reasons. First, it would be undesirable that the continuation of a stay be contingent on the applicant complying with the conditions that the respondent proposes. It would mean that the maintenance of a stay ordered by the Court would be contingent on the occurrence of external events which may be the subject of disputation. It is more likely however, that the respondent did not intend that a stay be contingent on the applicant's compliance with conditions, but rather that the conditions simply be imposed, and that if there was evidence of non-compliance, the respondent could approach the Court to have the stay set aside.
87 As to the conditions proposed, I think that there is sense in requiring that the applicant as a condition accompanying any stay attend to the accuracy of its data in the PRISMS system. I am prepared to make an order pursuant to s 44A(4)(a) of the AAT Act that within seven days the applicant is to: (1) review the accuracy of its data in the PRISMS system; (2) use its best endeavours to remedy any inaccuracies; and (3) advise the respondent of when that task has been completed.
88 The other conditions proposed by the respondent have caused me more concern. After giving the matter careful consideration I have determined that there can be no perfect outcome, and that subject to the condition referred to above, there should be no limitation on the stay, so that the stay granted by the Court under s 44A(2) of the AAT Act which is to be effective from 7 January 2021 is of the same practical effect as the stay given by the Tribunal on 7 June 2017 and which was in force until 7 January 2021. My reasons for coming to this conclusion are as follows -
(1) While it might be tempting to impose conditions on the applicant's operations as a response to the evidence of the applicant's contraventions, in the circumstances, I do not consider that to be an appropriate course. Any conditions should have as their purpose protection of the public, while balancing that interest against the applicant's interest in securing the effectiveness of the hearing and determination of the appeal. Punishment of the applicant by the imposition of limitations on its ability to operate should not form part of the discretionary considerations.
(2) The conditions proposed by the respondent seek to set up a further regime of compliance which, on the respondent's own submissions, would operate in parallel with the statutory requirements. It is undesirable that the Court becomes the de facto regulator of the applicant's operations, so that what is already a complex regulatory framework is supplemented by further requirements imposed by Court order.
(3) The imposition of limitations is liable to influence events that may not be capable of being controlled. The inability of the applicant to deliver courses to particular students who have enrolled for courses may trigger obligations under Part 5 of the ESOS Act. Further, the imposition of the conditions may have consequences in relation to the students' compliance with the conditions of their visas. The Court does not have before it complete information to identify and give consideration to these potential consequences, and I am reluctant to enter a field which introduces these types of problems.
(4) The appeal will be fixed for 19 April 2021 and should be able to be determined relatively quickly. The position of all interested parties will then be settled. On balance, I do not think it is desirable to introduce a complex regime to operate between now and the hearing and determination of the appeal. There was much force in the submissions of counsel for the applicant in this respect.
(5) There is a symmetry between the unconditional stay orders proposed by the applicant as its primary position, and the stay orders under which the applicant operated for over three and a half years prior to the Tribunal's decision of 10 December 2020. There is therefore also a symmetry between such orders and the final relief that the applicant claims to be entitled in the appeal.
(6) The purpose of granting a stay under s 44A(2) of the AAT Act is to secure the effectiveness of the hearing and determination of the appeal. That purpose would be compromised if there were conditions on the stay as proposed by the respondent. The conditions would have a tendency to undermine the continued operation and viability of the applicant's business, including by rendering the applicant incapable of delivering courses to students who have enrolled, and to continue developing a pipeline of new enrolments.
(7) I remain satisfied that, if the applicant is unsuccessful in its appeal and ceases to be able to offer courses to its students, then as I stated at [60] of the interim decision there are mechanisms in Parts 3 and 5 of the ESOS Act that are calculated to protect the interests of the students.