Mother's Choice Family Day Care Pty Ltd v Secretary, Department of Education

The cancellation decision

1. On 12 July 2019 officers of the respondent visited various family day care residences registered with Mother's Choice and also its principal office. A number of areas of non-compliance with the National Law and Regulations were identified and on 22 August 2019 the respondent issued a notice to Mother's Choice that it intended to cancel Mother's Choice's provider approval (the show cause notice). The grounds of the proposed cancellation were the Secretary's findings that: 1. the approved provider or a person with management or control of an education and care service operated by the approved provider is not a fit and proper person to be involved in the provision of an education and care service: s 31(a) of the National Law; and 2. the approved provider has breached a condition of the provider approval: s 31 (e) of the National Law.
2. The show cause notice also relied on deficiencies identified in visits to premises operated by Mother's Choice in November 2016 and October 2017. The respondent was of the view that Mother's Choice had demonstrated a recurring pattern of non-compliance with the National Law and Regulations.
3. In response to the show cause notice, Mother's Choice denied some of the allegations and in relation to others stated that it had taken extensive steps to ensure it remains fully compliant with the law. These steps included providing compliance training for all educators, developing a monthly professional development newsletter covering key compliance topics to keep educators up-to-date with their obligations, updating its child protection policy and developing an online facility for educators using Google Drive to ensure that educators were provided with access to all relevant materials to assist in ensuring compliance.
4. The Secretary conducted further compliance and monitoring visits on 12 February 2020 which identified a number of ongoing and further areas of non-compliance with the National Law and Regulations. On 15 June 2020 the Secretary determined to cancel the provider approval of Mother's Choice. The decision was made on the basis that Mother's Choice had breached a condition of its provider approval by failing to comply with the law in respect to the operation of its service, Kids Choice Family Day Care Pty Ltd. The Secretary formed the view that the nature of the non-compliance "poses a risk to the safety, health and well-being of a child or children being educated and cared for by you, as the approved provider for the Service".
5. The decision detailed some 17 alleged breaches of the National Law and Regulations. In addition, the decision recorded that Mother's Choice had failed satisfactorily to address each element of non-compliance set out in the show cause notice and had failed to implement the strategies identified in its response to the show cause notice which it had said it would employ to deal with these areas of non-compliance. The Secretary also expressed concern that the only person with management or control of the company spent very little time in Australia operating the service. In the Secretary's view this demonstrated that there was limited management available in the day-to-day operation of the service contributing to systemic and ongoing non-compliance.

The stay application

1. Mother's Choice seeks an order staying the operation of the cancellation decision up to and including the date on which the Tribunal determines the substantive review application. In support of the application Mother's Choice relies upon an affidavit of Mahdi Abaile, a director of the company.

The relevant principles

1. Where an application is made to the Tribunal for review of a decision made by the Secretary to cancel a provider approval, that application does not affect the operation of that decision nor prevent the taking of action to implement that decision unless the Tribunal makes an order staying or otherwise affecting the operation of that decision: s 43(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act). Section 43(1)(c) states: The Tribunal may make such orders (whether with or without conditions) staying or otherwise affecting the operation of a decision to which a pending general application ... relates as it considers appropriate to secure the effectiveness of the determination of the pending general application...
2. In Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37 Wright J at [9] summarised the principles applicable to the exercise of the Tribunal's discretion to decide whether a stay of a decision should be granted under s 43 of the NCAT Act (citations omitted): (1) Generally a successful party is entitled to the benefit of the decision or orders that the party has obtained at first instance, but a stay may be granted where the appellant has demonstrated an appropriate case to warrant the exercise of discretion in its favour - s 43(2) and (3) of the Act. (2) In practical effect the onus is on an applicant for a stay to make out a case that it is appropriate for the court to make such an order. (3) The mere lodgement of the notice of appeal is insufficient, of itself, to demonstrate that it is an appropriate case to warrant the granting of a stay. (4) An order staying the operation of a decision or orders will generally be appropriate where such an order is reasonably necessary to secure the effectiveness of the appeal - s 43(3) of the Act. This is similar to, if not the same as, the considerations applied by the Courts that where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, or where unless a stay is granted an appeal will be rendered nugatory, the discretion should generally be exercised in favour of granting a stay. (5) The Tribunal may also take into account the strength or otherwise of the case of the party seeking the stay. This consideration may be particularly relevant when it is plain that an appeal, which does not require leave, has been lodged without any real prospects of success and simply in the hope of gaining a respite against immediate execution of the decision. (6) The Tribunal's power to grant a stay includes a power to make such an order subject to such conditions as the Tribunal specifies. (7) In exercising the discretion, the Tribunal will also weigh the balance of convenience and the competing rights of the parties and may impose appropriate conditions so as to achieve a result that is fair to all parties. (8) Finally, the overriding principle in an application for a stay is to ask what the interests of justice require.
3. In applying these principles, it is necessary to have regard to the statutory context in which the decision was made (Liu v Chinese Medicine Council of NSW [2019] NSWCATOD 13). In the context of the National Law, this includes that the rights and best interests of the child are paramount and that best practice is expected in the provision of education and care services.
4. In addition, in New South Wales Bar Association v Stevens [2003] NSWCA 95 Spigelman CJ explained that, in an application for a stay where the issues involve the protection of the public, the public interest is entitled to significant weight.

Submissions of the parties

1. Both parties addressed the principles set out above in their submissions.

Securing the effectiveness of the determination of the review application

1. Mother's Choice contends that a stay is necessary to secure the effectiveness of the determination of the application. Mr Abaile points out that all service approvals held by the company in NSW, Victoria and Queensland will be cancelled if a stay is not granted. He states that as a result Mother's Choice will be forced to terminate some of its staff and all of its 94 educators. As all of the applicant's income is derived from its services in those three states, the company is likely to become financially unviable within a short period of time. Indeed Mr Abaile states that the company has limited cash reserves and believes it will become insolvent after a period of about 4 to 6 weeks and well prior to determination of the review application. He states that the company's financial difficulty is compounded by recent financial hardship experienced as a result of Covid-19 which caused attendances at day care services to reduce significantly.
2. Mother's Choice submits that its business may be lost before the final determination of the review if the stay is not granted. In this sense, the failure to grant a stay would finally determine the matter which, Mother's Choice submits, cannot serve the public interest.
3. The respondent submits that the review would not be rendered nugatory if the stay is not granted as, if Mother's Choice is successful, the provider approval will be reinstated. In the respondent's view, Mother's Choice has overstated the financial impact of any closure on its business and casts doubt on Mr Abaile's statement that the company is likely to become insolvent. The respondent submits that consideration must be given to the possibility that the decision will be affirmed on review. If is a stay granted, in these circumstances, Mother's Choice may continue to operate family day care services in circumstances which pose a risk to the safety of children. Furthermore, the respondent will be required to continue to divert resources to conducting monitoring and compliance activities in circumstances where the company has been given ample opportunity to improve and has failed to do so.

Strength of the applicant's case

1. Mother's Choice submits that there is a genuine dispute in relation to many of the matters set out in the cancellation notice. Furthermore, Mr Abaile states that where deficiencies have been identified remedial steps are being taken to ensure that all educators are aware of their obligations. Mother's Choice strongly disputes that there is any risk to the safety of any children attending family day care provided by Kids Choice in NSW. Mr Abaile states that the company has engaged an early childhood education and quality standard consultant, Ms Valerie Tillett, who has recently assessed any premises that were found to be unsafe during the last inspection in February 2020 and has recently assessed them as being safe. He states that Ms Tillett has been engaged on an ongoing basis to provide training and other services to ensure compliance.
2. Mr Abaile states that educators who were identified as having breached s 167 of the National Law concerning safety of children were immediately suspended and not reinstated until the company was satisfied that the safety issues were no longer an issue. Mr Abaile states that the company is committed to taking steps in the future to deliver more training and to ensure compliance. He also points out that the Queensland and Victorian services have both been inspected by the state regulatory authorities in the last 12 months and states that no safety issues or serious non-compliance issues were identified.
3. The respondent states that the case put forward by Mother's Choice could not be considered to be particularly strong in circumstances where there has been extensive non-compliance and a failure to address issues in the past. The respondent does accept, however, that it could not be said that Mother's Choice has no prospects of success.

The public interest

1. Mother's Choice submits that the Secretary cannot sustain a submission that there is a danger to the public that cannot await the outcome of the application for review. In this context Mother's Choice notes that that the first inspection occurred on 12 July 2019 and the second on 12 February 2020. It was not until 15 June 2020, however, that Mother's Choice was made aware of any concerns arising from the February visit and the cancellation decision was issued. Mother's Choice contends that if the incidents were so serious, or posed so imminent a risk, the Secretary could and would have taken action much earlier.
2. Mother's Choice submits that a number of third parties will be adversely affected if the stay is not granted. These include the 94 educators whose services will be terminated and who may be unable to find alternative work. Mother's Choice submits that it cannot be in the public interest for it to go out of business and for 94 small businesses to be no longer permitted to operate. Moreover, there are 508 children in NSW, Victoria and Queensland who utilise the services of Mother's Choice. Letters have been provided from parents of some of these children who have expressed their concern about the disruption that will be caused should they be required to change services. It is noted that displaced children may not be able to access culturally diverse childcare as is provided through Mother's Choice.
3. The respondent submits that the interest of justice and the public interest in the protection of children strongly support a conclusion that the stay should be refused and refers to the protective purposes of the National Law. The respondent states that there has been repeated non-compliance with the National Law and Regulations about which no action was taken or only taken after a significant time had passed. The respondent states that the Tribunal can draw no comfort from Mr Abaile's statements that remedial action has been taken.
4. Further, the respondent submits that there is nothing which suggests that Mother's Choice has in place an effective regime of monitoring and compliance such as would satisfy the Tribunal that the risk to children would be mitigated if a stay was granted. In the respondent's view, to continue to permit the company to operate until the application for a review of the cancellation decision is completed would pose an unacceptable risk to the safety, health and well-being of children.

Consideration

1. There is no doubt that there is a significant public interest in ensuring the safety, health and well-being of children attending family day care services. As to the seriousness of the non-compliance issues that have been raised in the cancellation decision, some do relate to immediate safety issues while others relate to the accuracy of records or lack of documentation in some instances.
2. There is some force in the respondent's position that, having regard to its non-compliance in the past and failure to remedy issues, there must be doubt that Mother's Choice will satisfactorily address non-compliance issues if a stay is granted. The evidence of Mr Abaile, however, is that significant steps have been and will be taken, including the engagement of an experienced practitioner, to assist in this regard. Mother's Choice has provided evidence that the most serious safety concerns have been rectified. One of the educators involved is no longer engaged by Mother's Choice and others were suspended but have been re-engaged.
3. It is not open to me in considering the application for a stay to conduct a preliminary hearing on the merits of the substantive proceedings. When the matter comes before the Tribunal for hearing, it may receive fresh evidence in addition to that which was initially before the Secretary. The respondent accepts, however, that it could not reasonably be argued that there is no prospect that Mother's Choice will succeed in the substantive application.
4. I am mindful that, if a stay is not granted, despite the respondent's submissions to the contrary, there is a real possibility that Mother's Choice will suffer significant financial hardship, if not insolvency. That in turn will have a significant deleterious effect upon the 94 educators engaged in NSW, Victoria and Queensland and upon the 508 children and their families who rely upon the service. While I accept the respondent's submissions that the effect of the cancellation decision upon the services in Victoria and Queensland, which have not been found to be wanting by the authorities in those states, is merely an unfortunate consequence of the national scheme, it does appear to be somewhat harsh.
5. Given the evidence put forward by Mother's Choice that steps are being taken to rectify any contraventions, together with clearly apparent effects upon children and families in three states if the services are cancelled immediately, I was satisfied that any risk to children on an interim basis can be mitigated by the imposition of conditions. Indeed, both parties made suggestions about appropriate conditions. Those conditions should, however, only apply to the NSW services as no issues have been raised by regulatory authorities with respect to the Queensland and Victorian services. I therefore determined that, on balance, the stay should be granted subject to the conditions as set out below.

Orders

1. The decision made on 15 June 2020 to cancel the provider approval of Mother's Choice Family Day Care Pty Ltd under s 33(1)(a)(i) of the Children (Education and Care Services) National Law (NSW) is stayed pending further order of the Tribunal on the following conditions: 1. Mother's Choice Family Day Care Pty Ltd is prohibited from enrolling more than 100 children at Kids Choice Family Day Care Pty Ltd at any one time. 2. Mother's Choice Family Day Care Pty Ltd is prohibited from engaging or registering more than 17 educators with Kids Choice Family Day Care Pty Ltd. 3. Mother's Choice Family Day Care Pty Ltd is to suspend the provision of education and care by the following educators: Aliaa Kobbanchi, Nabila Quadrat, Chania El Mir, Shaista Khan, Maryan Mohamed and Shukira Abubeker. 4. Mother's Choice Family Day Care Pty Ltd is prohibited from engaging and registering Waad Elchehni with Kids Choice Family Day Care Pty Ltd. 5. Mother's Choice Family Day Care Pty Ltd is to provide proof of the suspensions arising under condition (3) to the respondent by 5:00 pm on 30 June 2020.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 July 2020