(b) Should interlocutory relief be granted?
52 Again, perhaps not unsurprisingly, the parties were in substantial agreement concerning the relevant principles to be applied in considering whether or not interlocutory relief should be granted. It was in the application of those principles to the facts and circumstances here that the parties disagreed.
53 In broad terms, the relevant issues are whether the originating application raises a serious issue to be tried and where lies the balance of convenience. Discretionary considerations may also arise.
54 Section 15(1) of the ADJR Act is relied upon by the applicant in support of its claim for interlocutory relief (it should be noted that an alternative source of power is to be found in s 23 of the Federal Court of Australia Act 1976 (Cth)). There has been some discussion in the cases as to the appropriate test to apply under s 15(1) of the ADJR Act. The different formulations are discussed by Besanko J in Nyangatjatjara Aboriginal Corporation v Registrar of Aboriginal Corporations (No 2) [2006] FCA 675 at [33]-[38]. As his Honour noted at [38], in many cases the application of the test for an interlocutory injunction is the proper test to be applied on an application under s 15(1). I did not understand the parties to contend otherwise in this proceeding. Accordingly, in common with Besanko J, I will proceed to deal with the matter on that basis.
55 Turning to the question of whether there is a serious question to be tried, the proposed grounds of review as set out in the originating application are described in [44] above. They are unparticularised. In his written and oral submissions, Mr Coleman SC focused primarily on two of those grounds, namely those relating to a failure to take into account mandatory relevant considerations and unreasonableness.
56 On the first of those grounds, Mr Coleman SC identified eight matters which, he said, the applicant would contend were mandatory relevant considerations which were not taken into account by the delegate. They included that the facts and circumstances as known to the delegate on 4 April 2017 (when she advised MFISL that it would receive payments of funding for February and March 2017), did not change between that date and 6 April 2017, when she decided to stop further payments.
57 Mr Coleman identified the following additional matters which, he contended, were mandatory relevant considerations not taken into account by the delegate:
the delegate's knowledge on 6 April 2017 that the Full Court would hear MFISL's appeal on 17 May 2017;
the delegate knew then that the applicant would not be able to re-open its doors to students on 18 July 2017 if it did not receive public funding;
the delegate also knew of the implications for students, parents, teachers and support staff of the applicant being unable to open its doors on 18 July 2017;
in the circumstances, the delegate knew that the delay of public funding was likely to render nugatory the fruits of a successful appeal; and
the delegate knew, or ought to have known, that without public funding the applicant would be placed into administration, thereby jeopardising the recovery of monies from AFIC in the proceedings in the Supreme Court of New South Wales and, thereby, jeopardising the Commonwealth's prospects of recovering millions of dollars of public funds wrongly paid to AFIC.
58 The Court was told that all eight matters would also be relied upon by the applicant in support of its unreasonableness challenge.
59 It is well established by authorities such as Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 40-41 that, in the absence of an express statement in legislation that a particular consideration must be taken into account by a decision-maker in exercising a discretionary power, the question whether or not a particular consideration is a mandatory relevant consideration falls to be determined by an analysis of the subject matter, scope and purpose of the statute. The relevant terms of s 110(1) are set out in [19] above. In Rares J's decision, his Honour held that s 110(1)(c)(i) operates on "an existing state of affairs", namely a non-compliance, breach or failure to comply with a requirement in ss 75, 77 or 78. His Honour concluded that the Minister was empowered to make a decision under s 110(1)(c)(i) only if the jurisdictional fact of non-compliance, breach or failure actually exists.
60 The applicant's judicial review application here appears to be directed in part to the issue whether the relevant "state of affairs" as referred to by Rares J exists as a matter of law. It appears to be contended that the jurisdictional fact does not exist because of one or more of the grounds of review set out in the originating application. But there is another matter which is raised in these proceedings which did not arise in the proceedings before Rares J. It is directed to the proposition that, independently of the need for the jurisdictional fact validly to exist, on a proper construction of s 110(1), even if that jurisdictional fact does legally exist, the decision-maker has a residual discretion whether or not to exercise the power under that provision to delay making any further payment. It is contended that such a discretion is implicit in the use of the word "may" in the chapeau to s 110(1). That contention is plainly arguable and I did not understand Ms Davidson to contend to the contrary.
61 The next issue is whether there is a serious question to be tried as to whether one or more of the considerations described by Mr Coleman SC (see [56]-[57] above) are mandatory relevant considerations which were not taken into account by the delegate.
62 In my respectful view, that question should be answered affirmatively. It is sufficient at this interlocutory stage to identify a serious question in respect of only one of the list of considerations described by Mr Coleman SC. Thus it is appropriate to concentrate on the claim that, as at 6 April 2017, the delegate knew of the implications for students, parents, teachers and support staff of the school not being able to reopen (which would be the consequence of deferring further payments in respect of the school), but did not take that matter into account. The Minister contended that there was no serious question to be tried because "matters of disruption, or the continuity of provision of education, that is not - those are not matters with which the Act is concerned" (Transcript 51, lines 7-9). The Minister further contended that the scope of the Act is concerned with the provision of funding and that, notwithstanding the references in the Preamble and objects of the Act, the Act sought to address those matters by "a needs-based funding model". Thus, while it was acknowledged that it was open to a decision-maker to take into account the kinds of matters described by Mr Coleman SC, there was no legal duty to do so because they are not mandatory relevant considerations, so submitted the Minister.
63 For the following reasons I consider that there is serious question to be tried in relation to this aspect of the originating application. First, having regard to the Preamble and express objects in s 3 of the Act, the applicant has at least a respectable argument that, in exercising the residual discretion whether to proceed under s 110(1) of the Act, the decision-maker is obliged to take into account the likely effects of such a decision on affected students and the quality of their education. The provision of Commonwealth funding under the Act is not provided in a vacuum. Rather, such funding is plainly directed to achieving the relevant objects of the legislation, including the matters identified in the Preamble which are acknowledged in the objects (s 3(1)(b)).
64 Secondly, material was placed before the delegate prior to her decision which highlighted the likely practical and serious adverse consequences for students at the school if payments were further delayed. Such material was included in the letter dated 3 February 2017 which was sent by the then Chair of MFISL to the delegate:
While the school has some cash reserves, if the regular payments are not maintained it is difficult to see how the school could continue to operate for very long. The board would be forced to take the very painful step of closing down a highly successful school that has now addressed all compliance and governance matters and as indicated above is in the process of resolving either through settlement or litigation the excessive rent being paid to AFIC. The school not only achieves excellent academic results, but importantly, it is a place where appropriate values and attitudes are successfully passed on.
The question of reducing the payments is a difficult one. At the present time the Commonwealth Government provides approximately $19 000 000 per annum to the school. That money is virtually all used to pay salaries and associated staff entitlements. If that money is reduced in the short term, again it is hard to see how the school could continue to survive and cater for the learning needs of the students. We once again confirm that none of the School's own funds from fees are being paid to AFIC for any rent or services and that all rental payments have been suspended.
65 As previously noted, in her statement of reasons, the delegate made reference to this letter as forming part of the material which she had taken into account in making her decision. It appears, however, from the balance of those reasons that the letter was taken into account by the delegate in concluding that MFISL does not comply, is not complying or has not complied with ss 75 and 78. In other words, the information appears to have been taken into account in reaching the "state of affairs" which must exist as a jurisdictional fact for the purposes of s 110(1). There appears to be nothing in the delegate's statement of reasons to indicate that the delegate appreciated that she had a residual discretion not to make a decision to delay further payments even if she was satisfied that the relevant state of affairs existed. It is also arguable that the delegate did not appreciate that she may have been under a legal obligation, in the exercise of her discretion, to consider the likely practical consequences of her decision for the nature and quality of the education of the students affected by her decision. Accordingly, notwithstanding the delegate's statement that she had had regard to the 3 February 2017 letter, it is arguable that there is nothing in her statement of reasons to indicate that she had regard to this particular aspect of the letter, which highlighted the probable consequences of an adverse decision for the quality of the future education of the affected students. Arguably, the delegate focused exclusively on the compliance issues and did not have regard to a matter which she was required to take into account in considering the exercise of her discretion.
66 I must emphasise that it is unnecessary at this stage to express any final views on these matters. Upon a detailed examination of these matters, as would occur at the final hearing, the Minister's submissions on this issue may well prevail. Based on the evidence and material before me at this interlocutory stage, however, I am satisfied that there is a serious question to be tried on this particular issue. It is unnecessary at this stage to analyse the other proposed grounds of review other than to say that what I have said above may have some relevance to other grounds, including unreasonableness in the legal sense and abuse of power (in the relevant legal sense of both those grounds of review).
67 Turning now to the issue of the balance of convenience, Ms Davidson frankly conceded that the balance of convenience weighs in favour of the applicant. That concession was properly made in circumstances where closure of the school, which is imminent if funding is not restored, is bound to have significant affect on the students (in particular the students at the school who will sit their important Higher School Certificate examinations in October), as well as their parents and guardians and the teaching and other staff at the school who will have to search elsewhere for employment.
68 As noted above, the board of MFISL has proffered undertakings to the Court in support of the interlocutory application, which undertakings would complement and not replace the undertakings which remain in force following Rares J's decision. The proffered undertakings are in the following terms:
Scope of undertaking
1. Payments of financial assistance made by the Respondent in respect of MFISL are to be deposited into a separate bank account with the words "funds from Commonwealth Minister for Education and Training" included in the name of the account.
2. Any monies expended from that account must be clearly identified and the purpose of the expenditure noted in a separate set of accounts.
3. Supporting documents for each of the transactions from that account must be maintained.
4. No funds from that account are to be expended on:
(a) legal fees, for whatever purpose;
(b) attributed or paid in respect of any lease or loan arrangements; or
(c) matters otherwise contrary to the requirements of the Australian Education Act 2013.
5. At all times the balance of the account is to be held on trust for the Minister for Education and Training.
6. Reports on expenditure from the bank account are to be provided to the Respondent by the end of the first full week of each month.
69 I consider that those undertakings are appropriate and should be accepted as a condition of the grant of interlocutory relief. Another condition of the grant should be that the applicant must prosecute its judicial review challenge with all deliberate speed.
70 In the event that the Court determined to grant interlocutory relief, the Minister also requested that the Court take into account that recurrent grant funding under the Act is made on a monthly basis. It is appropriate that that course be taken. The recurrent grant funding payments in respect of the school are set out in a table which is an annexure to the affidavit of Mr Holcombe. The table is based on a statement of enrolments dated February 2017. It is convenient to set out the table in its entirety.
2017 Basis for calculating funding
January 8.3 per cent of annual entitlement based on 2016 Census
February 16.7 per cent of annual entitlement based on 2016 Census less payments already made for this year
March 25 per cent of annual entitlement based on 2016 Census less payments already made for this year
April 33.3 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
May 41.6 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
June 50 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
July 58.3 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
August 66.7 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
September 75 per cent of annual entitlement based on 2017 February Statement of Enrolment less payments already made for this year
October 83.3 per cent of annual entitlement based on 2017 Census data less payments already made for this year
November 91.7 per cent of annual entitlement based on 2017 Census data less payments already made for this year
December 100 per cent of annual entitlement based on 2017 Census data less payments already made for this year