FEDERAL COURT OF AUSTRALIA

Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1640

ORDERS

UPON THE APPLICANT BY ITS COUNSEL GIVING THE USUAL UNDERTAKING AS TO DAMAGES THE COURT ORDERS THAT:

1.    The time within which the applicant may lodge the originating application for judicial review in this proceeding be enlarged to 26 October 2018.

2.    Pursuant to s 15(1)(a) of the Administrative Decisions (Judicial Review) Act 1977, the operation of the respondent’s decision dated 18 September 2018 made under s 195H of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) to cancel the applicant’s provider approval be suspended from this day until 4:00 pm on 11 December 2018, or further order.

3.    If the respondent makes a decision on internal review before 11 December 2018, the applicant, within three days of having received notification of any internal review decision, take steps to have the matter relisted before the Docket Judge or, if the matter has not been docketed, the General Duty Judge for consideration as to whether the suspension should be vacated or extended.

4.    There be liberty to apply.

5.    The parties’ costs of the interlocutory application filed 26 October 2018 be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

1    On 6 September 2010 the applicant was approved as a provider for the purposes of Child Care Benefit Family Day Care Service pursuant to A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (Administration Act), s 195 (since repealed).

2    By a Notice dated 18 September 2018 a delegate of the respondent gave notice of cancellation of the provider approval of the applicant under s 195H(1)(b) of the Administration Act, effective 17 October 2018 (the decision).

3    The applicant commenced this proceeding by originating application for judicial review lodged 25 October 2018 seeking orders that the decision be quashed pursuant to s 16(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act). The applicant also filed an interlocutory application seeking orders under s 15 of the ADJR Act, including an order that the decision to cancel the applicant’s provider approval be suspended until 10.15 am on 11 December 2018. During the course of oral argument counsel for the applicant clarified that the suspension that was sought was prospective only, so that any suspension of the decision should operate from the date of the order of the Court.

4    The applicant has also applied for an internal review of the decision by the secretary pursuant to s 109A of the Administration Act. A lawyer for the respondent, Karst Hinderik Maat, deposed in an affidavit affirmed 26 October 2016 to instructions that the anticipated date for the determination of the internal review was approximately 26 November 2018.

Enlargement of time

5    The respondent raised a threshold point, namely that the originating application for judicial review had been lodged some days outside the 28 day period prescribed by s 11(3) of the ADJR Act, with the consequence that the Court lacked jurisdiction under that Act. However, at an early point in the hearing counsel for the respondent received instructions to consent to an enlargement of time. The hearing proceeded on the basis that an enlargement of time would be granted by the Court.

Applicable principles

6    The application for an order suspending the operation of the decision was put on two broad grounds: first, that the applicant enjoyed sufficient prospects of success such that there is a serious question to be tried; and second, that the balance of convenience favours the grant of a stay of the decision. In making these submissions, the applicant relied upon the decision of Thawley J in Galaxy Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1549 as capturing the relevant principles which should inform a consideration of the application for a stay under s 15 of the ADJR Act. In Galaxy, Thawley J records at [20] that the parties proceeded on the basis that it was appropriate to approach consideration of whether interlocutory relief should be granted on the basis of the test applied on an application for an interlocutory injunction. However, Thawley J referred to the decision of French J in Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119, which considered a number of cases concerning guidance relating to the exercise of the discretionary power in s 15 of the ADJR Act to suspend the operation of a decision. In Snow French J stated at 131 –

The discretion is broad and its scope best expressed by the kind of broad terminology used in Perkins v Cuthill even though in many cases the practical application of that formulation may be little distinguishable from the application of principles governing the grant of interlocutory injunctions.

7    In Perkins v Cuthill (1981) 52 FLR 236, to which French J referred, Keely J accepted a submission that he should not apply the principles relevant to the grant of interlocutory injunctions, and stated at 238 –

In my opinion s 15(1)(a) requires an applicant to satisfy the Court that reasons or circumstances exist which make it just that the Court should make the orders sought, but it is not necessary for the applicant to show that those reasons are in any sense special or exceptional.

8    I shall consider this application by reference to whether the circumstances make it just to make the orders sought by the applicant, but in the circumstances of this application there is no practical difference in the application of that broad formulation, and the principles that would be applicable in relation to an application for an interlocutory injunction: see Faingold v Zammit (1984) 1 FCR 87 at 92 (Sweeney, Lockhart and Sheppard JJ); Nyangatjatjara Aboriginal Corporation v Registrar of Aboriginal Corporations (No 2) [2006] FCA 675 at [38] (Besanko J).

Background

9    The application for a suspension of the operation of the decision was supported by affidavits of Mulki Samater affirmed 25 October 2018 and 28 October 2018, and two affidavits of the applicant’s solicitor, Vanessa Elizabeth Munnecke, sworn 30 October 2018. The respondent relied on the affidavit of Karst Hinderik Maat affirmed 26 October 2018 and referred to at [4] above. The background to the application may be described in summary form as follows.

10    The applicant’s provider approval entitles eligible parents who use the applicant’s services to receive subsidies from the Commonwealth government, meaning that they do not ultimately incur the cost of full hourly rates for child care which is arranged by the applicant. At the time of the first affidavit, the applicant provided family day care services to approximately 380 children, from 170 families who are typically refugees from East and Western Africa, Somalia, Sudan, Nigeria, Kenya and Iraq. The applicant also provides care for children with parents from an Indian background who are new migrants to Australia.

11    The nature of the child care that is provided is that care is given to children in the home of a carer known as an educator. Typically, the educator provides services such as caring for children before and after school, dropping children off at school, picking children up from school, or caring for the child during the day. Ms Samater deposes to the fact that the applicant provides income to support her family, and is their only source of income. Ms Samater deposes that she and her husband have three children under the age of 18, who are fully dependent upon them for accommodation and their daily living and care needs. The applicant employs ten full-time and part-time staff to assist Ms Samater and her husband to manage the applicant’s business.

12    On 30 April 2018 the applicant received a notice of intention to impose sanction, issued by a delegate of the respondent. The notice referred to s 201 of the Administration Act, which has since been repealed, which required the giving of notice before the Secretary could do any of the things authorised by s 200 of the Administration Act, which has also since been repealed. The notice alleged a number of contraventions by the applicant of its obligations under the terms of its approval. On 28 May 2018 the applicant provided the respondent with a detailed submission in response to the matters raised in the respondent’s notice.

13    On 18 September 2018 the applicant received the notice of cancellation effective 17 October 2018, which is referred to at [2] above. The notice of cancelation was accompanied by reasons. The reasons are detailed and extend over 12 pages, including footnotes. The delegate summarised the reasons for cancelation in paragraphs 10 and 11 of the reasons as follows:

10.    I am of the view that the Provider has:

•    Failed to comply with the eligibility rules that were applicable to the service in relation to the relevant period:

i.    Failing to remain a ‘suitable person’ to operate a child care service for the purpose of the family assistance law;

ii.    Failing to comply with its obligations to keep a register and/or documentary evidence in respect of care provided to children for whom no one is eligible unless specified circumstances apply.

•    Failed to comply with obligations imposed under the family assistance law:

i.    Failing to provide reports to the Secretary in accordance with section 219N of the Administration Act;

ii.    Failing to pass on payments to relevant individuals;

iii.    Failing to remit amounts that could not be passed on to the relevant individuals to the Secretary of the department.

11.    Where an obligation is or has been imposed on an approved child care service, it is taken to be imposed on the person operating the service. This means that the obligations to comply with conditions for continued approval of the service are ultimately those of the Provider (and the operator of the approved child care service in respect of non-compliance arising before 2 July 2018), acting through its officers and agents. The Provider cannot avoid responsibility for non-compliance with its obligations by point to the actions of others, including educators, employees or other staff members and parents.

14    The facts alleged to underlie these conclusions include the following allegations:

(a)    that the applicant had not, in some instances, maintained required documentation in relation to sessions of care provided to children aged 14 years or older or attending secondary school and that the applicant had submitted 415 reports for sessions of care where no one was eligible to receive child care service payments under the family assistance law, and had failed to remit to the Secretary fee reduction amounts that could not be passed on to families;

(b)    that for the period 1 January 2016 to 24 April 2018 the applicant submitted attendance reports in respect of 614 sessions of care where there was no eligibility because “child swapping” had occurred, which is reference to a circumstance where the child of an educator is cared for by another educator;

(c)    the applicant inaccurately reported 574 sessions of care involving two educators during periods when the educators were overseas;

(d)    the applicant inaccurately reported 208 sessions of care when the children concerned were overseas; and

(e)    in respect of 2,421 sessions of care reported to have been provided to children of either 14 years of age or older, or attending secondary school, the applicant failed to comply with its obligations to keep a register or documentary evidence.

15    By the originating application the applicant relies on several grounds in support of the final relief that is sought. It is sufficient for the purposes of the determination of this application for an order suspending the operation of the decision that I focus on the first of those grounds. Ground 1 is in the following terms –

1.    The decision was not authorised by the enactment in pursuance of which it was purported to be made: s (5)(1)(d) of the AD(J)R Act.

a.    The delegate misconstrued the statute or applied the wrong statutory test when determining whether the applicant complied with the conditions for continued approval and whether it is a “fit and proper” to operate a family day care service. The delegate applied provisions of the administration act as it was prior to 2 July 2018, and the suitable person test as it was contained in the eligibility rules, not the (correct) provision in section 195A of the Administration Act, and the “fit and proper person” considerations in section 194E (see for example, paragraphs 12-16 of the reasons for the decision).

The legislation

16    Ground 1 raises for consideration at a prima facie level the content of amendments that were made to the Administration Act by Schedule 1 of the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth) (Jobs for Families Act), together with the transitional provisions in that Act, and in the Child Care Subsidy Minister’s Rules 2017 (Minister’s rules) made under the Jobs for Families Act and under s 85GB of the A New Tax System (Family Assistance) Act 1999 (Cth).

17    The delegate decided to cancel the provider approval under s 195H(1)(b) of the Administration Act. Sub-sections 195H(1) and (2) of the Administration Act are in the following terms –

195H    Consequences of breach of conditions for continued approval

Sanctions

(1)    If the Secretary is satisfied that an approved provider has not complied, or is not complying, with a condition for continued approval of the provider, the Secretary may do one or more of the following:

(a)    suspend the provider’s approval;

(b)    cancel the provider’s approval;

(c)    suspend the provider’s approval in respect of one or more child care services;

(d)    vary the provider’s approval so that the provider is not approved in respect of one or more child care services;

(e)    reduce the number of any child care places allocated to the service under section 198B;

(f)    suspend, for a maximum of 3 weeks, payments under section 67EB of fee reduction amounts in respect of sessions of care provided by one or more approved child care services of the provider.

Note 1:    The Secretary may also decide to vary or impose additional conditions under subsection 195F(2).

Note 2:    Before doing a thing mentioned in paragraphs (a) to (f), the Secretary must follow the procedure in section 199A.

(1)    In exercising a power under subsection (1), the Secretary must have regard to any matters prescribed by the Minister’s rules as matters to be taken into account by the Secretary in applying the subsection to approved providers.

18    Section 195H is to be read with s199A of the Administration Act, which is in the following terms –

199A    Procedure before certain consequences apply

(1)    Before doing a thing mentioned in subsection 195H(1) or section 197D or 197E, the Secretary must give a notice to the provider concerned that:

(a)    states that the Secretary is considering doing the thing; and

(b)    sets out the grounds for doing the thing; and

(c)    summarises the evidence and other material on which those grounds are based; and

(d)    summarises the effect of doing of the thing on eligibility for CCS or ACCS in respect of a session of care provided by an approved child care service of the provider; and

(e)    summarises the provider’s rights under this Act to seek a review of the decision to do the thing; and

(f)    invites the provider to make written submissions to the Secretary, within 28 days, stating why the thing should not be done.

(2)    The Secretary must have regard to any submissions made by the provider in accordance with an invitation under paragraph (1)(f) in deciding whether to do the thing.

19    Sections 195H and 199A were inserted into the Administration Act by Schedule 1 of the Jobs for Families Act, and commenced on 2 July 2018. Although the cancellation of the provider approval in this case was made under s 195H, the grounds relied upon by the delegate included alleged failure to comply with conditions that were imposed on the applicant as an operator of an approved child care service under the Administration Act as in force before the amendments which commenced on 2 July 2018. Prima facie, this would appear to be authorised by ss 74 and 75 of the Minister’s rules. Sections 74 and 75 of the Minister’s rules are in the following terms –

74    Notices intending to impose a sanction

(1)    Where the Secretary has, before the commencement day, issued a notice under section 201 of the Family Assistance Administration Act to the operator of an approved child care service in relation to which no decision had been made under section 200 before the commencement day (as in force immediately before the commencement day), the Secretary may decide to impose a sanction on the approved provider in respect of the child care service under section 195H of the Family Assistance Administration Act after the commencement day as if the notice had been issued under section 199A of the Family Assistance Administration Act.

(2)    To avoid doubt, the breach of any condition for continued approval that was referred to in the notice is to be taken as a sufficient basis on which the Secretary is able to be satisfied in relation to the non-compliance referred to in section 195H, as if the condition applied as a condition for continued approval under Division 2 of Part 8 of the Family Assistance Administration Act on and from the commencement day.

75    Sanctions after the commencement day in respect of prior breaches

A sanction may be imposed on (and a notice under section 199A of the Family Assistance Administration Act may be given to) an approved provider in respect of a child care service on and from the commencement day under section 195H of the Family Assistance Administration Act on the basis of a breach of a condition for continued approval that applied in respect of the operator of the child care service under the family assistance law as saved by subitem 10(1) of Schedule 4 to the Jobs for Families Act.

20    Section 74(1) of the Minister’s rules authorises the imposition of a sanction under s 195H of the Administration Act as if the notice had been issued under s 199A. Section 74(2) is concerned with satisfaction of the fact of non-compliance, which is the jurisdictional fact that engages the discretionary power in s 195H to impose sanctions. For the purposes of this application I consider that the power to impose sanctions is subject to s 195H, including the requirement in s 195H(2) to have regard to any matters prescribed by the Minister’s rules. I consider that it is arguable that the power exercisable under s 195H of the Administration Act in this case was also subject to the requirement in s 199A(2) that the Secretary have regard to any submissions made by the applicant in response to the notice that was issued under the repealed s 201 of the Administration Act, which was to be treated as if it had been issued under s 199A.

21    In relation to the exercise of the power under s 195H of the Administration Act, s 52(3) of the Minister’s rules prescribes the following matters that must be taken into account –

Whether to impose a sanction

(3)    In deciding whether to impose a sanction on the provider, the Secretary must take into account whether the provider’s non-compliance:

(a)    appears to be an isolated incident or forms part of a history of apparent contraventions engaged in by the provider; or

(b)    has resulted in overpayments of CCS and ACCS, or is likely to result in such overpayments; or

(c)    involves a failure to reasonably cooperate with a person exercising powers under the family assistance law; or

(d)    involves the deliberate or reckless giving of inaccurate, false or misleading information to the Secretary, including in a report under subsection 204B(1) of the Family Assistance Administration Act; or

(e)    is associated with a debt to the Commonwealth (whether or not discharged) under Division 2 of Part 4 of the Family Assistance Administration Act; or

  (f)    is minor or serious in nature; or

(g)    is associated with any other relevant aggravating or mitigating factors in relation to the non-compliance.

22    In addition, s 54(4) of the Minister’s rules prescribes matters that are to be taken into account in considering which sanction to impose –

Which sanction to impose

(4)    The Secretary must take into account the following matters in considering which sanction to impose:

(a)    whether it would be more appropriate to exercise the power to suspend the provider’s approval under paragraph 195H(1)(a) of the Family Assistance Administration Act rather than to impose a different sanction, having regard to the following matters:

(i)    whether the provider’s non-compliance is of a systemic and ongoing nature (taking into account that systemic and ongoing contraventions may be more appropriately dealt with through cancellation rather than suspension);

(ii)    whether the provider’s non-compliance has resulted in significant debts of CCS and ACCS, or is likely to result in overpayments of CCS or ACCS if the approval is not suspended (taking into account that the higher the debts or overpayments, the more appropriate it is to cancel rather than suspend);

   (iii)    any other relevant matters;

(b)    whether it would be more appropriate to cancel the provider’s approval under paragraph 195H(1)(b) of that Act rather than to impose a different sanction, having regard to the following matters:

(i)    whether the non-compliance has resulted in significant and multiple overpayments of CCS and ACCS, or is likely to result in such overpayments if the approval is not cancelled;

(ii)    whether the non-compliance indicates a deliberate or reckless disregard for the obligation to comply with the condition, or a lack of ability to understand that obligation;

(iii)    whether the non-compliance demonstrates that the provider is no longer a fit and proper person to provide a child care service for the purposes of section 194E of the Family Assistance Administration Act;

(iv)    whether the non-compliance constitutes an unacceptable risk to the safety, health or wellbeing of children being cared for in one or more child care services for which the provider is approved;

   (v)    any other relevant matters.

23    As set out above, s 54(4)(b) of the Minister’s rules provides that in considering which sanction is to be imposed, regard is be had to whether the non-compliance demonstrates that the provider is no longer a fit and proper person to provide a child care service for the purposes of section 194E of the Administration Act. This is one of the considerations referred to in paragraph 73 of the delegate’s reasons, where the delegate stated –

73.    Having regard to the factors listed in subsection 52(4) of the Minister’s Rules, I am satisfied that cancellation is the appropriation [sic] sanction to impose in view of the following:

a.    The pattern and volume of non-compliance by the Provider demonstrates a systemic and ongoing nature of contraventions, which is more appropriately dealt with through cancellation.

b.    The Provider’s non-compliance has resulted in significant amount of overpayments, which is a relevant matter to consider, and is likely to result in overpayments of Child Care Subsidy (CCS) or Additional CCS if the approval is not cancelled.

c.    The non-compliance outlined in this notice indicates a deliberate or reckless disregard for the obligation to comply with the conditions on approval or represents a lack of ability to understand that obligation.

d.    The non-compliance demonstrated by the Provider leads me to believe that the Provider is no longer a fit and proper person to provide a child care service for the purposes of section 194E of the Administration Act. In assessing whether the Provider is a fit and proper person, I have also taken into consideration other relevant matters relating to the suitability to operate a service under the saved family assistance law.

e.    I consider there is an unacceptable risk to the safety, health and wellbeing of children being cared for in the child care service for which the Provider is approved. The Provider has on multiple occasions, claimed care for children when the educators or children were overseas. This demonstrates that the Provider is not monitoring its educators as required.

24    Paragraph 73 of the delegate’s reasons directs attention to s 194E of the Administration Act, which provides –

194E    Fit and proper person considerations

(1)    The Secretary must have regard to the following matters in determining whether a person is a fit and proper person for the purpose of paragraph 194C(b), (c) or (d) or 194D(c) or (d):

(a)    any non-compliance by a relevant person with a law of the Commonwealth or a State or Territory;

(b)    any proceedings currently before a court or tribunal that involve a relevant person;

(c)    any decision made under a law of the Commonwealth or a State or Territory relating to child care which adversely affects a relevant person;

(d)    subject to Part VIIC of the Crimes Act 1914, any conviction, or finding of guilt, against a relevant person for an offence against a law of the Commonwealth or a State or Territory, including (without limitation) an offence against children, or relating to dishonesty or violence;

(e)    any order for a relevant person to pay a pecuniary penalty for the contravention of a civil penalty provision of a law of the Commonwealth or a State or Territory;

  (f)    any act of a relevant person involving fraud or dishonesty;

  (g)    the arrangements the person has:

(i)    to ensure the person complies with the family assistance law; and

(ii)    to ensure anyone the person is responsible for managing complies with the family assistance law;

(h)    the record of administering of Commonwealth, State or Territory funds of a relevant person;

(i)    any debts to the Commonwealth incurred by a relevant person (whether or not the debt has been discharged);

(j)    the record of financial management of a relevant person, including any instances of bankruptcy, insolvency or external administration involving the person;

  (k)    any other matter prescribed by the Minister’s rules;

  (l)    any other matter the Secretary considers relevant.

25    As to s 194E(1)(k) of the Administration Act, s 46 of the Minister’s rules provides –

46    Additional matters to take into account

(1)    For paragraph 194E(1)(k) of the Family Assistance Administration Act, this section prescribes matters to which the Secretary must have regard in determining whether a person (the provider or person with management or control) is a fit and proper person.

(2)    The Secretary must have regard to the experience and expertise of the provider or person with management or control in the provision of child care services.

(3)    The Secretary must have regard to the understanding that can be demonstrated by the provider or person with management or control, of the obligations that would apply under the family assistance law, and the level of commitment to complying with those obligations.

(4)    The Secretary must have regard to whether all the following circumstances exist:

(a)    an educator who provides, or is to provide, care at the service (whether or not the person is employed by the provider of the service) has obtained a qualification in respect of providing child care from a registered training organisation;

(b)    the provider or person with management or control has an interest in that registered training organisation, by virtue of which the provider or person owns, operates, controls or carries out the registered training organisation;

   (c)    it reasonably appears that the qualification:

(i)    would not have been obtained without that interest of the provider or person with management or control, and as a result, the educator has not obtained the qualification solely on her or his own merit; or

(ii)    the qualification has otherwise been obtained in circumstances that might reasonably be perceived as a conflict of interest.

(5)    The Secretary must have regard to whether the provider or person with management or control has an interest in a business, by virtue of which the provider or person owns, operates, controls or carries out the business, if it reasonably appears that:

(a)    the nature of the interest is such that the provider’s or person’s ability to comply with obligations under the family assistance law is reduced; or

(b)    the nature of the interest is such that approval of the service will provide a benefit to the business; or

(c)    the circumstances are otherwise such that there might reasonably be perceived to be a conflict of interest.

The delegate’s reasons

26    Before I consider material features of the delegate’s reasons, I shall address a submission made on behalf of the respondent in relation to the drawing of inferences from the delegate’s reasons. In written submissions that were developed orally, the respondent submitted that because the delegate was not required to give reasons, and had given her reasons voluntarily, the delegate was not required to explain in detail how she dealt with any particular consideration or submission by the applicant, and the absence of any such detailed explanation or discussion by the delegate of such matters does not support an inference that she failed to consider such matters. The respondent relied upon a passage from the reasons of French CJ, Bell, Keane and Gordon JJ in Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at 185 [25] -

It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision (4). It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision (5), and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate (6). Further, “jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power” (7); but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision. Further, the Delegate’s letter is “not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed” (8).

(Footnotes omitted)

27    For the purposes of this interlocutory application to suspend the operation of the decision I do not give much weight to the respondent’s submission that relied on the fact that the delegate’s reasons were volunteered and were not required. The decision of the delegate was communicated by the notice dated 18 September 2018 which stated –

The reasons for my decision including the findings I have made and the evidence that supports those findings, are set out in the attachment titled Reasons for Imposing Sanction of Cancellation.

28    Attached to the notice was a 12 page document titled, “Reasons for Imposing Sanction of Cancellation”. The respondent did not adduce any evidence on this application to suggest that the reasons in the 12 page document were incomplete. Having regard to the express statement in the notice that is set out above, and to the detailed content of the 12 page document, on a prima facie basis I consider that it would be open to infer at the trial of this proceeding that the contents of the 12 page document constitute the delegate’s considered reasons notwithstanding that they were not furnished under a legal obligation to do so.

29    There is no express reference in the delegate’s reasons to having taken into account the individual considerations referred to in s 194E of the Administration Act, or in s 46 or s 52 of the Minister’s rules. On a prima facie basis it is arguable that the delegate’s reasons support an inference that no attention was directed by the delegate to these considerations. In addition to the absence of express reference to those considerations, there are two additional features that would bear upon this argument.

30    First, it is arguable that the enquiry required by s 54(4)(b)(iii) of the Minister’s rules as to whether non-compliance with the relevant statutory conditions demonstrates that the provider is no longer a fit and proper person is to be undertaken as at the time of the decision. That is arguably supported by the terms of other considerations in s 194E of the Administration Act and in s 46 of the Minister’s rules. In its submissions to the respondent dated 28 May 2018 in response to the Secretary’s notice, the applicant identified at paragraph 12 of the submissions a number of policy changes that it said it had implemented to ensure future compliance. Arguably, the respondent was required to take this submission into account under s 199A(2) of the Administration Act, under s 52(3)(g) and s 54(4)(a)(iii) of the Minister’s rules, under s 194E(1)(g) of the Administration Act, and under s 46(3) of the Minister’s rules. In the delegate’s reasons, there is reference made at paragraph 14 to considerations relevant to whether the applicant was a ‘suitable person’, including the quality of governance arrangements, and the applicant’s understanding of obligations that would apply to it under the family assistance law. But it is arguable that the delegate had regard to these considerations only for the purpose of considering whether there had been a contravention of the conditions of continued approval under s 196 of the Administration Act (as in force before the commencement of the Jobs for Families Act, and which is saved by ss 74 and 75 of the Minister’s rules), and not on the question of sanctions under s 195H of the Administration Act.

31    At paragraph 37 of the reasons in the section concerned with child-swapping the delegate stated –

I am not satisfied that the Provider has adequate governance systems in place to ensure such breaches do not continue.

32    However, notwithstanding this reference in the context of child swapping, I consider it arguable that the delegate’s reasons do not reveal any real consideration of the actual policy changes to which the applicant had referred at paragraph 12 of its submissions, which went beyond the child swapping issue, and which were arguably relevant to the questions whether a sanction should be imposed, and if so, what sanction to impose.

33    Second, the reasons of the delegate contain a number of statements about the direct responsibility of the provider for non-compliance with its obligations. Section 52(3)(g) of the Minister’s rules requires the Secretary in deciding whether to impose a sanction to have regard to relevant aggravating or mitigating factors in relation to the provider’s non-compliance. This mandatory consideration assumes non-compliance, but directs attention to other factors. In relation to the 574 sessions of childcare that were claimed in respect of educators who were overseas, and the 196 sessions of childcare where the respondent alleged that the children were overseas, the applicant stated in its submissions that these erroneous claims were a consequence of fraud committed by some of the educators. Arguably, the respondent was required by s 199A of the Administration Act to consider these submissions. It is arguable by reference to paragraph 43 of the delegate’s reasons that the delegate thought that the only relevance of the allegation of fraud was as an admission that inaccurate attendance records were submitted. It is arguable that no attention was given to whether the fraud alleged to have been committed by the educators was a mitigating circumstance for the purposes of s 52(3)(g) of the Minister’s rules, which was evidently the point of the submission. Rather, at paragraph 47 of the reasons the delegate stated –

The Provider cannot avoid responsibility for non-compliance with its obligations by pointing to the actions of others, including educators, employees or other staff members and parents.

34    And at paragraph 32 of the reasons the delegate stated –

I note that the Administrative Appeals Tribunal (AAT) also considers that a Provider has ‘a clear obligation imposed on it by Commonwealth law and it is not in point to explain away failure to meet that obligation by referring to the errors of others’ (Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706 paragraph 26).

35    The AAT case that is referred to was a review of a cancellation of approval prior to the commencement of the Jobs for Families Act. The context in which the broad observations were made by the AAT member is unclear from the report of the decision. The observations made in that case arguably should not supplant the mandatory considerations referred to in the current legislation. In the final bullet point of paragraph 72 of the delegate’s reasons the delegate states –

I am not satisfied that there are any relevant mitigating factors in relation to the non-compliance, particularly given that under the family assistance law all obligations are taken to be imposed on the operator of the approved child care service, and consequently I have given little weight to the submissions which attempt to reduce responsibility of the operator by blaming other persons for the non-compliance.

36    It is arguable that error is exposed by this passage because, as I have suggested, the question of mitigation arises on the assumption that there has been a contravention of the legislation, and the matters put in mitigation, particularly the allegations of fraud, have not been given proper consideration. To put the point another way, the fact that the statutory obligations are imposed on the operator, and have been found to have been contravened, should not preclude proper consideration of any mitigating factors that have merit.

37    On the above grounds the applicant has an arguable case for final relief to the extent that there are sufficient prospects to justify consideration of the exercise of the Court’s discretion to make an order under s 15(1)(a) of the ADJR Act to suspend the operation of the decision. In the circumstances, I do not consider it necessary to examine the other grounds relied on by the applicant to support its claim for final relief.

Prejudice to the applicant

38    The respondent submitted that the applicant’s evidence about the detriment it would suffer if the operation of the decision was not suspended was “vague and limited”. I do not accept this submission. The applicant’s affidavit evidence explained that its business was, in effect, a family business that depended upon the ability to provide ongoing child care services to migrant families on a subsidised basis. This evidence was not contradicted, and nor was it challenged by cross examination.

39    I accept that if an order suspending the operation of the decision is not made, then the continued operation of the applicant’s business will be jeopardised. That is because users of the applicant’s child care services will not be entitled to receive those services on a subsidised basis. There would be a reasonable prospect that as a consequence the applicant would suffer loss of custom, which might affect the viability of the business in the sector in which it operates, namely providing child care services to migrant families with working parents. I also accept that there are third parties such as employees of the applicant, educators engaged by the applicant, and families who use the services provided by the applicant who might be affected or inconvenienced.

Prejudice to the respondent

40    The cancellation of the applicant’s provider approval was effective from 17 October 2018. The respondent submitted that there might be difficulties in the operation of any order made now that was expressed to be retrospective to the effective date of the decision. However, in response to this submission the applicant submitted that it sought an order that operated only prospectively. I therefore do not need to consider any practical difficulties that might arise as a result of an order with retrospective operation, or whether the Court has power to make such an order.

41    The applicant offered the usual undertaking as to damages as a condition of making the order suspending the operation of the decision. The respondent did not submit that any other conditions should be imposed should an order be made. In the circumstances, I consider that any potential prejudice to the respondent is sufficiently addressed by the undertaking as to damages that was offered.

42    The applicant has offered to pay to the respondent the sum of $43,725 on presentation of an invoice on account of payments made on the basis of erroneous reports given by the applicant. The evidence is that the applicant has paid this sum into its solicitors’ trust account pending receipt of an invoice from the respondent. No reliance was placed by the respondent on the non-payment of monies owing to it as a reason to refuse the order for suspension of operation of the decision.

Alternative remedy

43    The respondent submitted that in considering whether to exercise the power to suspend the operation of the decision it was relevant to have regard to the fact that the applicant has available to it an alternative remedy, namely a merits review by the respondent under s 109A of the Administration Act, which it has elected to pursue. The respondent relied on the decision of the Full Court in Riverside Nursing Care Pty Ltd v Bishop (2000) 100 FCR 519. In that case the Full Court referred, by way of obiter, to the discretion to refuse a remedy in s 10(2)(b) of the ADJR Act where adequate provision is made by any law other than the ADJR Act under which the applicant is entitled to seek a review of the decision. In Riverside Nursing Care the applicant had invoked the jurisdiction of the Administrative Appeals Tribunal to review the decision in question. The Full Court noted that the Administrative Appeals Tribunal had power under s 41 of the Administrative Appeals Tribunal Act to stay the operation or implementation of a reviewable decision. However, the position of the parties to this application is that there no power under the Administration Act to suspend operation of the decision pending a review of the original decision by the respondent under s 109A of the Administration Act.

44    Contrary to the respondent’s submissions, I do not accept that the absence of such a power in the Administration Act is a reason to refuse the application under s 15(1)(a) of the ADJR Act. It is relevant that the review available under s 109A of the Administration Act is an internal review by the respondent, and not an external review by an independent tribunal such as a court, or the Administrative Appeals Tribunal. In Colpitts v Australian Telecommunications Commission (1986) 9 FCR 52 at 62 Burchett J stated, “An ‘appeal from Caesar to Caesar’ is the proverbial paradigm of an empty formality offering no real hope”. The fact that the internal review is to be undertaken by the respondent is material to the question whether such a review can be considered to be an adequate alternative remedy to judicial review under the ADJR Act.

45    In my view the answer to the respondent’s submission relating to the availability of an alternative remedy is that, in the circumstances of this case, until the Secretary reviews the decision under s 109A of the Administration Act, the applicant is affected in a substantial way by a decision which, on its case, is liable to be quashed, and the applicant is therefore entitled to pursue the originating application for final relief. Whether final relief should be refused on the discretionary basis referred to in s 10(2)(b) of the ADJR Act would be a matter for trial. Accordingly, the availability of an internal review by the respondent under s 109A of the Administration Act is of little weight in my consideration of whether it is just to make an order to suspend the operation of the decision.

Can the operation of the decision be suspended after it has become effective?

46    The respondent raised before the Court the question whether the operation of the decision to cancel the applicant’s provider approval can be suspended under s 15(1)(a) of the ADJR Act after the decision became effective on 17 October 2018. A similar issue was considered by Sundberg J at first instance in Riverside Nursing Care Pty Ltd v Bishop (2000) 60 ALD 704, to which the respondent drew the Court’s attention. In that case the respondents made a decision to revoke the approval of the applicant as a provider of aged care services. The applicant sought an order under s 15(1)(a) of the ADJR Act suspending the operation of the relevant decisions. Sundberg J held that the applicant had not demonstrated that there was a point of substance, or serious question to be tried, which was a sufficient basis on which his Honour refused the application. Sundberg J nonetheless considered a further argument put on behalf of the respondents that an order suspending the operation of a decision is available only where the original decision declared a status or factum from which statutory consequences could flow, but have not flowed before the suspension is sought. Sundberg J rejected this argument, stating at [28] –

In my view the respondent's argument misapprehends the effect of an order under s 15(1)(a) suspending the operation of a decision. Counsel conceded that if the applicant were successful on the substantive hearing, the decisions would be quashed, the revocation of approved status would be lifted, and the allocation of places would be restored. The effect of the court's order would be to render non-existent decisions that were theretofore effective and binding. If the court has power to grant final relief the effect of which is to annul an earlier decision, it must have power, by a suspension order, to produce that result on a temporary basis: cf Minister for Immigration, Local Government and Ethnic Affairs v Msilanga (1992) 34 FCR 169 at 179 per Beaumont J.

47    The respondent referred also to a decision of R D Nicholson J in Long v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 122 FCR 159. In that case the respondent cancelled the applicant’s visa. The applicant sought an order that the decision by the respondent to cancel the visa be stayed. The applicant did not invoke the ADJR Act, because it was accepted that a claim under the ADJR Act in relation to the cancellation of the visa was untenable. The application for a stay was made seeking to invoke the Court’s general powers under s 23 of the Federal Court of Australia Act 1976 (Cth). The respondent in Long submitted that where a visa has been cancelled there was nothing in relation to which a stay could operate, and that an order staying the decision to cancel the applicant’s visa made after the decision has been implemented and the visa cancelled would be meaningless. R D Nicholson J accepted the respondent’s submission, stating at [23]-[24] –

… I accept that, absent statutory authority of the type which appeared in the former s 482 of the Act, the Court has no power to stay an administrative decision which has taken effect in law so as to affect legal rights so that there is no continuing aspect of the decision remaining to be stayed. If, however, the decision has continuing effects the Court has power, subject to any statutory provision, to stay those effects or some of them subject to it being otherwise appropriate for a stay order to be made. In this respect I note that s 15(1) of the Administrative Decisions (Judicial Review) Act distinguishes between the suspension of the operation of the decision and a stay of all or any proceedings under the decision.

I do not consider that a different result can be reached by placing reliance on s 23 of the Federal Court of Australia Act as the accepted source of the Court’s power to stay. This is because, absent a provision such as the former s 482(2), the decision to the extent it has taken effect is beyond stay.

48    The reference by R D Nicholson J to the former s 482(2) is to a provision of the Migration Act 1958 (Cth), which had provided –

(2)    If an application is made to the Federal Court under s 476 or s 477 in relation to a judicially-reviewable decision, the Federal Court or a Judge of the Federal Court may make such orders of the kind referred to in subs (3) as that Court or Judge considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal.

(3)    The orders that may be made under subs (2) are orders staying, or otherwise affecting the operation or implementation of the judicially-reviewable decision, or part of that decision.

49    The decision of Sundberg J in Riverside Nursing was not cited in Long.

50    I reject the idea that the respondent’s decision to cancel the applicant’s provider approval is not now amenable to an order under s 15(1)(a) of the ADJR Act to suspend its operation on the ground that it became effective on 17 October 2018. I consider that I should apply the reasons of Sundberg J in Riverside Nursing Care Pty Ltd v Bishop at [28], which are considered obiter dicta that are directly on point. Section 15 of the ADJR Act is a remedial provision which can be given a beneficial construction. The analysis of Sundberg J in Riverside Nursing Care Pty Ltd v Bishop at [28] gives s 15 of the ADJR Act a construction which is harmonious with powers of the Court under s 16 of the ADJR Act to give final relief, and gives s 15 an interpretation which augments and furthers the purpose of the Act which can be inferred from its operative provisions, such as s 16. In my opinion, the construction adopted by Sundberg J should be preferred over other interpretations: Acts Interpretation Act 1901 (Cth), s 15AA.

Conclusions

51    The applicant has made out a sufficiently arguable case for final relief which, in combination with the prejudice that it is liable to suffer if an order is not made, and in combination with the undertaking as to damages which is offered, make it just that an order be made under s 15(1)(a) of the ADJR Act substantially in the terms sought by the applicant.

Costs

52    The applicant sought costs of the interlocutory application seeking the suspension of the operation of the decision in the event that it was successful. The applicant pointed to the fact that by email correspondence late last week it had invited the respondent to consent to orders substantially in the terms that I propose to make, but with costs reserved.

53    The respondent opposed an order for costs in the event that the applicant was successful. The respondent submitted that the application had been brought at short notice, that an extension of time was necessary, that the merits of the applicant’s underlying claim had yet to be finally determined, and that the respondent had at all times acted reasonably in the presentation of the case. The respondent relied on a decision of Kenny J in Interpharma Pty Ltd v Hospira Inc (No 4) [2018] FCA 45 where the costs of an application for an interlocutory injunction were ordered to be costs in the cause, and a decision of Griffiths J in Malek Fahd Islamic School Ltd v Minister for Education and Training [2017] FCA 757 where the costs of an application for an extension of time, and an order under s 15(1)(a) of the ADJR Act were ordered to be costs in the cause.

54    The conduct of the respondent in not accepting the applicant’s proposed consent orders cannot be characterised as unreasonable. Further, the conduct of the respondent in resisting the application has been reasonable, and the applicant did not submit otherwise.

55    Costs are discretionary, and there is usually little utility in comparing the facts of one case with the facts of another in determining how a discretion as to costs should be exercised. However, there is appellate authority to the effect that the usual order for costs in the case of a successful application for interlocutory injunction, to which the current application has some parallels, is that costs be costs in the cause: His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand and Anor v the Macedonian Orthodox Community Church St Petka Inc and Anor (No 2) [2007] NSWCA 142 at [27]. However, I note that r 40.04 of the Federal Court Rules 2011 provides –

40.04    Costs on interlocutory application or hearing

If no order for costs is made on an interlocutory application or hearing, the costs of the application or hearing:

(a)    if an order is made in favour of any party – follow the event; or

(b)    if no order is made in favour of any party – are taken to be costs in the cause of the successful party to the proceeding.

56    In my opinion, this rule provides for a default position if no order as to costs is made. In this application, both parties seek that I make a specific order addressing the question of costs: cf, James v Commonwealth Bank of Australia (No 2) [2015] FCA 599 at [20].

57    I consider that there are no special circumstances of this case that take it outside the usual case of an application for an interlocutory injunction to preserve the status quo pending trial. The costs of the application shall be reserved.

Associate:

Dated:    2 November 2018