FEDERAL COURT OF AUSTRALIA

Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills & Employment (No 2) [2020] FCA 1749

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s originating application be dismissed with costs.

2.    Subject to paragraph 3, the stay of the provider approval cancellation decision made by the respondent in respect of the applicant on 7 May 2020, as effected by paragraph 2 of the Orders made on 25 June 2020, be lifted.

3.    Paragraph 2 of these orders is to take effect on the date that is 14 days after the date of these orders.

4.    The parties have liberty to apply within 7 days of the date of these orders:

(a)    in the case of each party, to vary the date in paragraph 3 of these orders or to seek further orders consequent upon the reasons for judgment of the Court; and

(b)    in the case of the respondent, for damages pursuant to the applicant’s undertaking given by paragraph 2 of the Orders made on 25 June 2020.

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

REASONS FOR JUDGMENT

O’BRYAN J:

A.    Introduction

1    On 1 October 2009, the business called Billan Family Day Care was approved by the respondent, the Secretary of the Department of Education, Skills & Employment (Secretary), under s 195 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (Administration Act) (as in force at that time) as a child care service for the purposes of the family assistance law. The applicant, Ms Sagal Mohamed, is the operator of Billan Family Day Care.

2    The effect of being an approved child care service under s 195 of the Administration Act is that individuals whose children are being provided with care at Billan Family Day Care receive child care subsidies from the Commonwealth, which are paid to Billan Family Day Care, with the result that the individuals do not have to pay the full hourly rates charged by Billan Family Day Care’s educators.

3    Part 8 of the Administration Act was amended by the Families Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth) (Amendment Act). The applicable transitional provisions stipulated that a person who was the operator of an approved child care service immediately prior to the commencement of the Amendment Act is taken to be an approved provider of a child care service within the meaning of the amended Administration Act (see Item 9 of Part 4 of Schedule 4 of the Amendment Act). As a result of the Amendment Act, the applicant became the approved provider of the Billan Family Day Care service for the purposes of the Administration Act (as amended).

4    On 7 May 2020, the Secretary issued the applicant with a notice cancelling the applicant’s provider approval under s 195H(1)(b) of the Administration Act which was stated to take effect from 28 June 2020 (cancellation decision). The cancellation decision was accompanied by a document entitled “Reasons for Intention to Sanction” (cancellation reasons). From the day the provider cancellation takes effect, the applicant is no longer an approved provider under the Administration Act and individuals whose children are being provided with care at Billan Family Day Care are no longer eligible for the applicable child care subsidies.

5    On 12 May 2020, the applicant requested the Secretary to undertake an internal review of the cancellation decision under s 109A of the Administration Act. The internal review application does not prevent the cancellation decision from taking effect. At the time of the hearing, the internal review was ongoing.

6    By originating application filed on 4 June 2020, the applicant sought judicial review of the cancellation decision under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act). The applicant sought orders setting aside the cancellation decision.

7    By interlocutory application filed on 5 June 2020, the applicant also sought an interlocutory order under s 15 of the ADJR Act that the cancellation decision be stayed until the Secretary delivers a decision on its internal review of the cancellation decision. On 25 June 2020, and upon the applicant through her legal representative providing the usual undertaking as to damages, I granted a stay of the cancellation decision until the final determination of the applicant’s originating application: Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills & Employment [2020] FCA 900.

8    The applicant’s originating application was heard on 24 August 2020. In support of the application, the applicant relied on her affidavit affirmed 4 June 2020 and an affidavit of her solicitor, Isabella Kate Royce, affirmed 13 July 2020. The Secretary relied on an affidavit of her solicitor, David Brown, affirmed 27 July 2020. None of the deponents were cross-examined.

9    On 16 November 2020, when judgment was reserved, the Secretary’s solicitor appropriately brought to the Court’s attention the decision of Rares J in Al-Huda Pty Ltd v Secretary, Department of Education and Training [2020] FCA 1613 (Al-Huda) delivered on 16 October 2020 and which considered one of the issues raised in this proceeding. That decision is referred to below.

10    For the reasons that follow, I dismiss the applicant’s originating application.

B.    Background

Billan Family Day Care

11    The applicant deposed that she has been operating a family day care business under the name of Billan Family Day Care since October 2009. The evidence indicates that Billan Family Day Care is a business name for the applicant’s business and is not a corporation or partnership. The applicant deposed that she is the director of Billan Family Day Care and is responsible for the day to day operations of Billan Family Day Care.

12    The applicant deposed that, on 1 October 2009, Billan Family Day Care was granted approval to operate a Child Care Benefit Family Day Care service under s 195 of the Administration Act (as in force at that time). The applicant further deposed that Billan Family Day Care is an approved family day care service provider under the Education and Care Services National Law (set out in the Schedule to the Education and Care Services National Law Act 2010 (Vic) and adopted by other State and Territory jurisdictions) (National Law). In September 2009, Billan Family Day Care was granted a licence to operate a family day care service in Victoria. On 30 October 2013, Billan Family Day Care was approved to operate in New South Wales and on 3 July 2015, Billan Family Day Care was approved to operate in Queensland.

13    The applicant deposed that Billan Family Day Care is approved to engage or register 125 family day care educators in Victoria and 15 educators in both New South Wales and Queensland. At the time of her affidavit, the applicant deposed that Billan Family Day Care registered approximately 58 educators, being 51 in Victoria and 7 in Sydney. Billan Family Day Care’s Queensland service has been closed since 3 April 2020. The applicant deposed that approximately 166 families rely on Billan Family Day Care for family day care. Billan Family Day Care provides family day care services to approximately 362 children in Victoria and New South Wales. It has a multi-cultural mix of families from Australia, Pakistan, India, Sudan, Somalia, Iraq and Afghanistan. It mainly provides services to families from lower socio-economic backgrounds.

Child care subsidy

14    The Secretary’s written submissions summarised the child care subsidy system that is regulated and administered under the Administration Act. The applicant did not dispute that summary, which is as follows.

Since 2 July 2018, child care subsidy (CCS) and additional child care subsidy (ACCS) have been part of a suite of family support payments to which eligible individuals are entitled, pursuant to A New Tax System (Family Assistance) Act 1999, and A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). The respondent makes a weekly determination of the amounts of child care subsidy (CCS) and additional child care subsidy (ACCS) that an eligible individual should be paid towards meeting child care fees charged by an approved child care service provider, based on a report submitted to the respondent by that approved provider: s 67CD(1)(b) of the Administration Act.

The approved provider must give the respondent an attendance report, in the form and manner prescribed by the respondent, where an enrolment notice for the child in the approved provider’s child care service has been given to the respondent, for each week in which a session of child care was provided to the child. The report must include information, including the fee amount an individual is liable to pay for a session of care provided to a child by an approved child care service provider under a complying written agreement, which is relevant to the respondent determining whether an individual is eligible to receive CCS or ACCS, and if so how much: section 204B of the Administration Act.

Any CCS or ACCS due to an eligible individual is paid by the respondent to the approved provider for passing on to the eligible individual in the form of a reduced fee amount charged to them for child care services, and where it is not reasonably practicable for the approved provider to pass on the fee reduction amount, then the money is to be remitted to the respondent: s 201A of the Administration Act.

Only approved providers are eligible to receive CCS and ACCS for passing on to eligible individuals.

Approval of child care service providers

15    Part 8 of the Administration Act governs the approval of child care service providers. Division 1 concerns the initial approval of a service provider and stipulates conditions for the initial approval. Division 2 stipulates conditions for continued approval. Relevantly, s 195A(1) provides that it is a condition for continued approval of an approved provider that:

(a)    the provider continues to satisfy the provider eligibility rules in s 194C; and

(b)    each approved child care service of the provider continues to satisfy the service eligibility rules in s 194D.

16    Pursuant to s 194C, a provider satisfies the provider eligibility rules if, among other things, each of the provider and any person with management or control of the provider is a fit and proper person to be involved in the administration of CCS and ACCS. Pursuant to s 194D, a child care service satisfies the service eligibility rules if, among other things, each person who is responsible for the day-to-day operation of the service is a fit and proper person to be involved in the administration of CCS and ACCS.

17    The assessment of whether a person is a fit and proper person for the purposes of ss 194C and 194D is governed by s 194E which provides as follows:

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.

(2)     For the purposes subsection (1), a relevant person is:

(a)     the person; and

(b)     another person or body in respect of which the person is or has ever been a person with management or control.

Note: See section 194F for the definition of person with management or control.

18    Section 46 of the Child Care Subsidy Minister’s Rules 2017 (Minister’s Rules) prescribes the matters to which the Secretary must have regard in determining whether a person is a fit and proper person for the purposes of s 194E(1)(k) of the Administration Act. Relevantly, s 46(2) stipulates that 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.

19    Section 195G provides that the Secretary may at any time assess whether a provider is complying with the conditions for continued approval of the provider.

20    The sanctions that may be imposed on an approved provider for failure to comply with the conditions for continued approval are governed by s 195H which (relevantly) provides as follows:

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.

(2)     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.

Notice of sanction

(3)     If the Secretary does any of the things mentioned in subsection (1), the Secretary must give notice to the provider that the Secretary has done so. The notice must specify the day the thing takes effect (which must be not earlier than the day the notice is given).

…

21    Section 52 of the Minister’s Rules prescribes the matters to be taken into account by the Secretary in exercising a power under s 195H(1) for the purposes of s 195H(2). The section provides as follows:

52     Matters the Secretary must take into account in exercising the power to impose a sanction on an approved provider

(1)     This section prescribes matters for subsection 195H(2) of the Family Assistance Administration Act to be taken into account by the Secretary in relation to the exercise of a power to impose a sanction under subsection 195H(1) of that Act for having not complied, or not complying, with a condition (or conditions) of the provider’s continued approval.

(2)     This section does not limit the matters the Secretary may take into account for that purpose.

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

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

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.

22    Section 199A of the Administration Act provides that, before doing any of the things mentioned in s 195H(1), the Secretary must:

(a)    give a notice to the provider concerned that, amongst other things, states that the Secretary is considering doing the thing, sets out the grounds for doing the thing, summarises the evidence and other material on which those grounds are based and invites the provider to make written submissions to the Secretary, within 28 days, stating why the thing should not be done; and

(b)    the Secretary must have regard to any submissions made by the provider in deciding whether to do the thing.

The cancellation decision

23    On 2 April 2019, a delegate of the Secretary (Delegate) gave the applicant a notice of intention to impose a sanction under s 199A of the Administration Act. The notice stated that the sanction being considered was the cancellation of the applicant’s provider approval for the services of the Billan Family Day Care in Victoria, NSW and Queensland. The notice was accompanied by a statement of the reasons for imposing the sanction and invited the applicant to make written submissions in response.

24    On 1 May 2019 and 7 June 2019, the applicant’s legal representative, Kalus Kenny Intelex, provided evidence and submissions on behalf of the applicant in response to the notice. The submissions argued that there were a number of issues that could not be fully investigated by the applicant due to a lack of information. In response to those submissions, a supplementary notice of intention to impose sanctions was issued to the applicant by the Delegate on 10 September 2019, together with additional reasons for the intention to sanction (providing further information). The supplementary notice again invited submissions in response. Evidence and submissions were provided by the applicant in response on 8 and 9 October 2019 and 16 December 2019.

25    On 7 May 2020, the Delegate gave the applicant notice of cancellation of the applicant’s provider approval for the services of the Billan Family Day Care in Victoria, NSW and Queensland under s 195H(1)(b) of the Administration Act. The cancellation notice specified that the cancellation would take effect on 28 June 2020. The notice stated that reasons for the decision, including the findings made and the evidence that support the findings, were set out in an accompanying document titled Reasons for Imposing Sanction of Cancellation.

26    The cancellation reasons was a lengthy document (some 60 pages, before annexures). The document stated that the Delegate had decided to cancel the approval of the applicant under s195H(1)(b) of the Administration Act because the Delegate was satisfied that:

(a)    the applicant had not complied with one or more conditions for continued approval; and

(b)    cancellation was the appropriate sanction to impose in respect of the non-compliance.

27    In Part 2 of the cancellation reasons, the Delegate found that the applicant had failed to comply with a large number of conditions for continued approval. In particular, the Delegate found (at [63] of the cancellation reasons) that the applicant had failed to comply with:

(a)    obligations imposed under the family assistance law because the applicant had failed to provide reports to the Secretary in accordance with the family assistance law, notify the Secretary of certain matters, pass on payments to relevant individuals and remit amounts that could not be passed on to the relevant individuals to the Secretary;

(b)    a law of the Commonwealth, State or Territory in respect of child care because the applicant had failed to meet the educator to child ratios, keep records and provide the required information in the records; and

(c)    the eligibility rules that were applicable during the relevant period because the applicant had failed to meet conditions relating to suitability requirements and what constitutes a ‘fit and proper person’, comply with obligations to provide educator details and 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.

28    In relation to the failure to comply with the family assistance law, the applicant was found to have (amongst other things):

(a)    provided inaccurate reports for 894 sessions of care provided by educators who were overseas or arriving/departing when they were reported to be providing child care services, resulting in payment of $17,848 in child care fee assistance (at [91] of the cancellation reasons);

(b)    provided inaccurate reports for 420 sessions of care involving children who would not have been receiving care because they were overseas or arriving/departing at the relevant time, resulting in payment of $8,181 in child care fee assistance (at [117] of the cancellation reasons);

(c)    provided inaccurate reports for 649 sessions of care involving children who would not have been receiving care because they were living in a different state at the time the child care service was said to have been provided, resulting in payment of $8,264 in child care fee assistance (at [128] of the cancellation reasons);

(d)    provided inaccurate reports for 336 sessions of care for children who would not have been receiving care because they were living too far away from the claimed place of service provision for this to be possible, resulting in payment of $3,676 in child care fee assistance (at [134] of the cancellation reasons);

(e)    provided inaccurate reports for 95 sessions of care for children who were reported as being provided with care at another child care service at the same time (overlapping sessions), resulting in payment of $3,277 in child care fee assistance (at [151] of the cancellation reasons);

(f)    provided inaccurate reports for 2,193 sessions of care involving children where the care was found to have been provided in the child’s own home, resulting in payment of approximately $44,982 in child care fee assistance that no-one was eligible to receive (at [171] of the cancellation reasons);

(g)    provided inaccurate reports for 416 sessions of care involving children where the care was found to have been provided by a sibling who was also an educator, resulting in payment of approximately $7,853 in child care fee assistance that no-one was eligible to receive (at [176] of the cancellation reasons);

(h)    provided inaccurate reports for 1,656 sessions of care involving children who were 14 years of age or older, or who attended secondary school, resulting in payment of approximately $ 21,494 in child care fee assistance that no-one was eligible to receive (at [208] of the cancellation reasons);

(i)    provided inaccurate reports for 33,514 sessions of care where a genuine legal liability to pay for child care did not arise and therefore did not constitute a session of care to which child care fee assistance was payable, resulting in $667,687 in child care fee assistance that no-one was eligible to receive (at [357] of the cancellation reasons).

29    In relation to the failure to comply with a law of the Commonwealth or a law of a State or Territory, the applicant was found to have (amongst other things):

(a)    failed to ensure that the requirements of the National Law (and the regulations made pursuant to the National Law) that no more than seven children were cared for by an educator at any one time was adhered to on eight occasions (at [391] of the cancellation reasons); and

 (b)    failed to ensure that the requirements of the National Law (and the regulations made pursuant to the National Law) that no more than four pre-school aged children were cared for at any one time was adhered to on 54 occasions (at [401] of the cancellation reasons).

30    In relation to the failure to comply with the eligibility rules, the Delegate’s findings with respect to whether the applicant was a fit and proper person to be an approved provider, having regard to the mandatory considerations set out in s 194E(1) of the Administration Act, were summarised in the form of a table (at [425] of the cancellation reasons). The table was as follows:

31    The Delegate concluded that, having taken all these matters into account and, on balance, the Provider was not a fit and proper person to be involved in the administration of CCS and ACCS (at [426] of the cancellation reasons).

32    In Part 3 of the cancellation reasons, the Delegate considered whether to impose a sanction and which sanction to impose.

33    The Delegate concluded that a sanction was the appropriate action to take (at [451] of the cancellation reasons). In reaching that conclusion, the Delegate had regard to s 52(3) of the Minister’s Rules and made the following findings with respect to each consideration:

443.     In regard to section 52(3)(a), I consider:

•    the non-compliance forms part of a history of contraventions by the Provider, which has occurred over a period of more than three years.

444.     In regards to section 52(3)(b), I consider:

•    the non-compliance has resulted in the overpayment of CCS and ACCS, and is likely to continue to result in the overpayment of CCS and ACCS. I also consider that prior to 2 July 2018, the non-compliance resulted in the overpayment of child care fee assistance in the form of CCB and CCR payments.

445. In regards to section 52(3)(c), I do not consider that the Provider’s non‐compliance involves a failure to reasonably cooperate with a person exercising powers under the family assistance law.

446.     In regards to section 52(3)(d), I consider:

•    The Minister’s Rules do not define ‘deliberate’ or ‘reckless’. I have therefore considered the ordinary meaning of ‘reckless’ should be applied in having regard to sections 52(3) and 52(4) of the Minister’s Rules

•    The Macquarie Dictionary definition of the adjective ‘reckless’ is:

‘utterly careless of the consequences of action; without caution’ or ‘characterised by or proceeding from such carelessness’.

•    The Macquarie Dictionary definition of the adjective ‘careless’ is:

‘not paying enough attention to what one does; not exact or thorough; done or said heedlessly or negligently; unconsidered’ and ‘not caring or troubling; having no care or concern; unconcerned’.

•    The Macquarie Dictionary definition of the adjective ‘deliberate’ is:

‘carefully weighed or considered; studied; intentional’.

•    Applying these definitions I consider the Provider’s non-compliance involves frequent ‘reckless’ giving of inaccurate information as it is clearly characterised by, at the very least, carelessness. The Provider has not been ‘exact’ or ‘thorough’ in meeting the obligations under the family assistance law. In particular:

•    Reporting sessions of care for educators or children who were overseas at the time that the care was purportedly provided

•    Reporting sessions of care for children who have been reported as being provided with care at another child care service at the same time

•    Failing to obtain and maintain the relevant documentary evidence and register with regard to children 14 years of age or older or attending secondary school

•    Reporting sessions of care for children who located in a different state to the educator or located a significant distance from the educator

•    Reporting sessions of care which occurred in the child’s own home

•    Reporting sessions of care for children where the educator is a sibling of the child in care

•    Failing to submit or vary attendance reports and submit enrolment notices to the CCMS or the CCSS within the required timeframe

•    Inaccurate or missing educator details, such as an educator’s name, CRN, working with children checks and address

•    Submitting attendance reports for days when the attendance record identifies the child did not attend

•    Attendance records did not provide for accurate recording of children’s session start and end times.

•    I am unable to determine whether or not the provider’s action were ‘deliberate’. However, I find the Provider has demonstrated a reckless disregard for the obligation to comply with the condition and lack of ability to understand its obligations under the family assistance law

•    The submissions from the Provider contained documents that I have considered may be inaccurate, false or misleading. These documents have been identified in this Notice and in the attachment titled Assessment of Evidence. Some of the content in the documents:

•    does not support the information the Provider has submitted into the CCMS

•    has identified other inaccurate information

•    contradicts the department’s information

447.     In regards to section 52(3)(e), I consider:

•    I am not aware of any debts to the Commonwealth that have been formally raised against the Provider. However, I have had regard to the possibility that future debts are likely to be raised against the Provider in respect of overpayments arising out of the non-compliance identified in this Notice. The Provider, in its submissions, has acknowledged that it is does have debts owing to the Commonwealth for receipt of payments to which it was not entitled.

448.     In regards to section 52(3)(f), I consider:

•    The non-compliance is serious in nature due to the large number of different types of contraventions, the quantity and ongoing repetition of contraventions

•    Furthermore, I consider it is of serious concern that the safety, health and wellbeing of children may have been placed at risk, as:

•    The Provider has reported care where no care actually occurred, or where care has been provided at another service. I consider this demonstrates the Provider has failed to ensure that the children in its care are appropriately accounted for. I also consider this demonstrates that the Provider is not monitoring its educators as required and in turn, it is unlikely that sufficient safety or educator home visits are occurring. In my view, this is a serious breach of the Provider’s obligations under the family assistance law.

•    Educator to child ratios have been exceeded on 62 occasions.

•    The NSW SRA has identified that the Billan FDC NSW has been issued with a ‘Caution letter’ after a child went missing. A follow up assessment identified ‘No supervision policies, procedures or training have been provided to educators registered with Billan Family Day Care.’ I consider this to be a serious incident and the outcome of the NSW SRA assessment of the Provider’s policies, procedures and training of educators identifies a risk to the safety, health and wellbeing of children.

449.     In regards to section 52(3)(g), I consider:

•    The amount of child care subsidies paid by the Commonwealth as a result of the Provider reporting inaccurate sessions to be a relevant aggravating factor.

•    I also consider a variety of issues regarding the health, safety and wellbeing of children in the care of the Provider, as raised over time and detailed throughout this Notice, to be a relevant aggravating factor in relation to the Provider’s non‐compliance

•    I am not satisfied that the assertion that ‘There are a very small number of attendance reports made by Billan FDC which were inaccurate.’ (KKI letter one, Paragraph 2(c)), exonerates the Provider from acting in accordance with the family assistance law.

•    I have taken into account the submissions that certain non‐compliance may have occurred due to administrative errors and/or educators misleading the Provider. While I have considered these explanations, I do not place much weight on these factors as I am of the view that the Provider’s lack of capacity to understand its obligations and its inadequate governance processes were larger contributors to the non‐compliance that occurred

•    I have taken into account the submissions that set out processes and procedures the Provider claims have been initiated to prevent the non-compliance from reoccurring. While I have considered these claims, it is my view that the Provider has not had appropriate measures in place to prevent the non-compliance from occurring, and certain measures put in place as a result of being notified of non-compliance have proved ineffectual, as non-compliance has continued after the measures were purportedly implemented. Therefore, I do not place much weight on these matters.

450.     In regard to section 52(3)(c) I do not consider that the Provider’s non‐compliance involves a failure to reasonably cooperate with a person exercising powers under the family assistance law.

34    The Delegate concluded that the appropriate sanction was the cancellation of the applicant’s provider approval under s 195H(1)(b) of the Administration Act having regard to the seriousness of the applicant’s non-compliance (at [454]- [456] of the cancellation reasons). The reasons for that decision were expressed as follows:

•    The non-compliance has been of a systemic and ongoing nature, having occurred over a number of years, and involving approximately 41,434 separate contraventions (see the summary of findings table in the attachment titled Assessment of Evidence)

•    The non-compliance appears to have resulted in significant and multiple overpayments of CCS and ACCS, and additionally, significant and multiple overpayments of CCB and CCR, with a total of approximately $788,905 (see the summary of findings table in the attachment titled Assessment of Evidence)

•    A number of documents provided to the department by the Provider appear to be false, inaccurate or misleading which indicates a reckless disregard of the Provider’s obligation to comply with the family assistance law

•    It is likely that overpayments would continue to occur if the Provider continues to operate the services

•    I consider that I could draw any or all of the following conclusions:

•    The Provider may be aware of its obligations, however has chosen not to comply with those obligations

•    The Provider’s governance and administration practices are insufficient to ensure compliance with the family assistance law

•    The Provider lacks the ability to understand its obligations.

•    The non-compliance suggests the Provider is no longer a fit and proper person to provide a child care service

•    The non-compliance constitutes an unacceptable risk to the safety, health and wellbeing of children being cared for in the child care services for which the Provider is approved, as:

•    The Provider has reported care where no care actually occurred or where care has been provided at another service. I consider this demonstrates the Provider has failed to ensure that the children in its care are appropriately accounted for. I also consider this demonstrates that the Provider is not monitoring its educators as required and in turn, it is unlikely that sufficient educator home visits are occurring. In my view, this is a serious breach of the Provider’s obligations under the family assistance law.

•    The Provider has exceeded the educator to child ratio on a number of occasions.

•    Confirmed breaches identified by the NSW SRA and the Queensland SRA, including a serious matter where a child in the care of a service went missing.

•    As outlined in the Notice and in this Notice, the Provider has previously been made aware of instances of apparent non-compliance with the family assistance law, yet has continued to fail to meet its obligations. That the Provider was made aware of this apparent non-compliance, had a number of opportunities to correct issues identified, and has failed to do so, is of particular concern.

C.    The grounds of review

35    The applicant’s originating application states two grounds of review. The first ground of review is to the effect that, in deciding to impose the sanction of cancellation, the Delegate misconstrued the meaning of the word “reckless” in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules. The second ground of review is to the effect that, in deciding whether the applicant has complied with the conditions for continued approval and whether she is a “fit and proper person” to operate a family day care service, the delegate misconstrued or applied the wrong statutory test with respect to ss 194E(1)(e), (f), (i), and (k) of the Administration Act and s 46 of the Minister’s Rules .

36    The two grounds of review are stated to be based on the following paragraphs of s 5(1) of the ADJR Act:

(a)    paragraph (b), which allows review on the ground that procedures that were required by law to be observed in connection with the making of the decision were not observed; and

(b)    paragraph (d), which allows review on the ground that the decision was not authorised by the enactment in pursuance of which it was purported to be made.

37    At the commencement of the hearing, and in response to questions from the Court, the applicant accepted that paragraphs (b) and (d) of s 5(1) of the ADJR Act may not be applicable and invited the Court to consider her application on the basis of paragraphs (e) and (f) of s 5(1). Paragraph (e) allows review on the ground that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made. By subsection 5(2)(a) and (b) of the ADJR Act, the ground includes taking an irrelevant consideration into account and failing to take a relevant consideration into account. Paragraph (f) allows review on the ground that the decision involved an error of law. The Secretary did not object to the Court proceeding in that manner.

38    The grounds of review referred to in paragraphs (e) and (f) of s 5(1) of the ADJR Act are both subject to an implied statutory test of materiality. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 (Peko-Wallsend), Mason J (with whom Gibbs CJ and Dawson J agreed) concluded (at 40) that not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law; a factor might be so insignificant that the failure to take it into account could not have materially affected the decision. Similarly, in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 (Bond), the High Court concluded that a decision does not "involve" an error of law within paragraph (f) unless the error is material to the decision in the sense that it contributes to it so that, but for the error, the decision would have been, or might have been, different: at 353 (Mason CJ, with whom Brennan and Deane JJ agreed) and 384 (Toohey and Gaudron JJ). Those implied statutory limitations are based on analogous common law principles which have been most recently restated by the High Court in the context of jurisdictional error in Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at [29]-[31] (Kiefel CJ, Gageler and Keane JJ) and Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 (SZMTA) at [68], [69] and [71] per Bell, Gageler and Keane JJ.

39    As also observed by Mason J in Peko-Wallsend (at 40-41, citations omitted):

The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned: Wednesbury Corporation. It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power.

40    As the second ground of review concerns the Delegate’s decision as to the applicant’s compliance with the conditions for continued approval as a child care provider, and the first ground of review concerns the Delegate’s decision as to the imposition of a sanction for non-compliance, it is both logical and convenient to address ground 2 before addressing ground 1.

D.    Ground 2

41    The applicant submitted that, in deciding whether the applicant complied with the conditions for continued approval and whether she was a fit and proper person to operate a family day care service, the Delegate misconstrued or applied the wrong statutory test with respect to paragraphs 194E(1)(e), (f), (i), and (k) of the Administration Act and s 46 of the Minister’s Rules.

42    As a preliminary matter, it is relevant to note that the applicant has misstated the relevant statutory condition for continued approval of an approved provider. As set out earlier, it is a condition for continued approval that the provider continues to satisfy the provider eligibility rules in s194C and each approved child care service of the provider continues to satisfy the service eligibility rules in s194D. Relevantly, the provider eligibility rules in s 194C include that the provider, and any person with management or control of the provider, is a fit and proper person “to be involved in the administration of CCS and ACCS”. Similar language applies in the case of the service eligibility rules in s 194D. In contrast, the applicant’s originating application reformulated the rule as whether the applicant was a fit and proper person “to operate a family day care service”. That is a different criterion, and not the statutory criterion.

43    There was no dispute that the matters referred to in s 194E(1) of the Administration Act were mandatory considerations for the Secretary in assessing whether the applicant was a fit and proper person to be an approved provider. It must also be noted that paragraph (l) requires the Secretary to have regard to “any other matter the Secretary considers relevant”. Thus, if the Secretary considers a matter to be relevant, the Secretary is required to take the matter into account.

Paragraphs 194E(1)(e), (f) and (i)

44    As set out above, the Delegate recorded his or her consideration of the matters referred to in s 194E(1) in the cancellation reasons in the form of a table. The applicant submitted that the Delegate erred in concluding that it was “possible” that there was material relevant to the matters referred to in s 194E(1)(e), (f) and (i). The applicant argued that the findings made by the Delegate in respect of those paragraphs were not relevant to the statutory considerations and showed that the Delegate had misconstrued the statutory considerations.

45    It can be accepted that the second column of the table created by the Delegate with the heading “Any relevant material?” is undesirable because it has a tendency to detract from the clarity of the Delegate’s findings. That is particularly so when the answer to the question is “possible”. As the applicant submitted, each of paragraphs (e), (f) and (i) required the Secretary to determine whether the matters referred to in those paragraphs existed and, if they did, to take them into account in the assessment of whether the applicant was a fit and proper person. Determining that it was possible that the matters existed would not discharge the statutory task.

46    Although the second column of the table created by the Delegate was undesirable, it would be wrong to look at the second column alone. As submitted by the Secretary, the second column was addressed to the question whether there was any material relevant to the statutory consideration; it was not addressed to the question whether the material (evidence) established that the consideration was applicable. The latter question was addressed in the third column of the table that was headed “Findings”. That column contained the Delegate’s substantive conclusions on each of paragraphs (e), (f) and (i).

Paragraph (e)

47    Paragraph (e) required the Secretary to consider 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. In respect of that consideration, there was an express finding that the Delegate was “not aware of 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”. The finding is clear and concludes the mandatory relevant consideration in paragraph (e). However, the Delegate also found that:

This Notice identifies non-compliance with some parts of the family assistance law, breaches of which may result in the imposition of a civil penalty. No decision has yet been made as to whether the Provider will be subject to civil penalties, however, I have taken the gravity of the relevant breaches into account when considering which sanction to apply.

48    The applicant argued that the possibility of a future order to pay a pecuniary penalty is not a relevant consideration under paragraph (e). I accept that submission. The plain meaning of paragraph (e) is that it refers to an existing order to pay a pecuniary penalty, not the possibility of a future order. However, it does not follow that the matters referred to by the Delegate, the fact of non-compliance with some parts of the family assistance law and the gravity of those matters, are irrelevant considerations to the Delegate’s decision. Indeed, those matters are mandatory relevant considerations under paragraph (a) (any non-compliance by a relevant person with a law of the Commonwealth or a State or Territory) and the Delegate’s additional finding recorded in the table against paragraph (e) largely repeats the finding recorded against paragraph (a). Further, paragraph (l) required the Secretary to have regard to any other matter the Secretary considers relevant. It is apparent from the table that the Delegate regarded as relevant the fact of non-compliance with some parts of the family assistance law and the gravity of those matters, and it cannot be said that there is any error in the Delegate’s views that those matters are relevant to the assessment of whether the applicant is a fit and proper person to be an approved provider (and relevant to the assessment of sanctions for non-compliance). While it might have been preferable for the Delegate to have recorded those findings separately to the Delegate’s specific findings about paragraph (e), I do not consider that the manner in which the Delegate expressed his or her findings shows that the Delegate misconstrued paragraph (e) of s 194E(1) or otherwise erred in taking those matters into account.

Paragraph (f)

49    Paragraph (f) required the Secretary to consider any act of a relevant person involving fraud or dishonesty. In respect of that consideration, there was an express finding that the Delegate was “not aware of any act of a relevant person involving fraud or dishonesty”. The finding is clear and concludes the mandatory relevant consideration in paragraph (f). However, the Delegate also went on to find as follows:

However, in its submission the Provider states ‘that educator/parent fraud may have been committed’. Yet the Provider gave no evidence of an investigation into its allegations of fraud having been committed or requested.

50    The applicant argued that fraud by parents and educators is not relevant to the matter referred to in paragraph (f), which is concerned with fraud or dishonesty of a “relevant person” as defined (here, the applicant). I accept that submission. Again, though, it does not follow that the findings made by the Delegate, the fact that the applicant was aware that educators or parents may have committed fraud but the applicant provided no evidence that she had investigated such matters, are irrelevant considerations to the Delegate’s decision. Those findings are relevant to paragraph (g), which required the Secretary to have regard to arrangements the applicant has to ensure that persons for whom the applicant is responsible for managing comply with the family assistance law. In that regard, it can be seen that the Delegate’s finding, although recorded in connection with paragraph (f), is consistent with and repetitive of the Delegate’s findings recorded in connection with paragraph (g), part of which was:

I am not satisfied that the Provider has demonstrated that it has instituted or can maintain effective governance arrangements to ensure compliance with the family assistance law, as specified in this Notice.

Having been provided with education, information and previous notification of apparent non-compliance (as set out in paragraph 92 of the Notice), the Provider has been unable to set good governance practices in place to ensure compliance with the family assistance law.

51    In my view, it was also permissible for the Delegate to have regard to those matters under paragraph (l) (any other matter the Secretary considers relevant). It is apparent from the table that the Delegate regarded as relevant the fact that the applicant gave no evidence of having taken action to investigate possible fraud by educators or parents in respect of the multitude of instances of non-compliance with the family assistance law that had been notified to the applicant. It cannot be said that there is any error in the Delegate’s view that those matters are relevant to the assessment of whether the applicant is a fit and proper person to be an approved provider. Again, while it might have been preferable for the Delegate to have recorded those findings separately to the Delegate’s specific findings about paragraph (f), I do not consider that the manner in which the Delegate expressed his or her findings shows that the Delegate misconstrued paragraph (f) of s 194E(1) or otherwise erred in taking those matters into account.

Paragraph (i)

52    Paragraph (i) required the Secretary to consider any debts to the Commonwealth incurred by a relevant person (whether or not the debt has been discharged). In respect of that consideration, the Delegate found as follows:

I am not aware of any debts to the Commonwealth incurred by a relevant person (whether or not the debt has been discharged).

However, I have had regard to the possibility that future debts may be raised against the Provider in respect of overpayments arising out of the non-compliance identified in this Notice.

Throughout the submissions, the Provider acknowledges on multiple occasions that it has incurred a debt to the Commonwealth. For example, in SD1 (Paragraph 122) the Provider sets out that ‘Billan FDC apologises for these errors and acknowledges that it is liable to pay the sum of $985 to the Commonwealth in respect of these sessions…’

53    The applicant argued that, in paragraph (i), “debts incurred” refers to debts that are in existence, rather than any possible future debts and the Delegate misconstrued the statutory provision, and took into account an irrelevant consideration, by considering possible future debts.

54    I accept the submission that, in paragraph (i), “debts incurred” refers to debts that are in existence. However, the effect of the provisions of Division 2 of Part 4 of the Administration Act (and particularly ss 70 and 71B) is that, if a child care subsidy has been paid for a session of care where there was no entitlement to the subsidy, the amount paid is a debt due to the Commonwealth. As set out earlier, the Delegate found that the applicant’s non-compliance with the family assistance law was systematic and ongoing and had resulted in thousands of sessions of care in which child care subsidies were paid where there was no entitlement totalling approximately $788,905 (at [454] of the cancellation decision). The effect of Division 2 of Part 4 of the Administration Act is that that amounted to a debt due to the Commonwealth from the applicant. It also follows that the Delegate erred in finding that the applicant’s non-compliance did not give rise to an immediate debt in favour of the Commonwealth but might give rise to a future debt.

55    While in my view the Delegate’s consideration of the matter referred to in paragraph (i) of s 194E(1) was based on an erroneous understanding of the provisions of Division 2 of Part 4 of the Administration Act, the error was not material to the decision. The Delegate took into account the amounts received by the applicant where there was no entitlement, but wrongly described them as possible future debts to the Commonwealth. If the Delegate had understood (correctly) that they were in fact existing debts to the Commonwealth (on the Delegate’s findings), there is no reason to believe that the Delegate’s decision would have been any different. If anything, the case in favour of finding that the applicant was not a fit and proper person would have been even stronger. It follows that the Delegate’s decision did not involve an error of law within the meaning of s 5(1)(f) of the ADJR Act.

Paragraphs 194E(1)(k) of the Administration Act and s 46 of the Minister’s Rules

56    By virtue of s 194E(1)(k) and s 46 of the Minister’s Rules, the Secretary was required to have regard to the experience and expertise of the provider or person with management or control in the provision of child care services.

57    It was common ground that, in assessing whether the applicant was a fit and proper person to continue to be an approved provider, the Secretary was required to take each of the matters referred to in s 46 of the Minister’s Rules into account in the sense of applying an active mental process to those matters (see Tickner v Chapman (1995) 57 FCR 451 at 462, 476, 495 and Carrascalao v Minister for Immigration and Border Protection (2017) 252 FCR 352 at [45]). It was also common ground that the cancellation reasons did not refer to the applicant’s experience and expertise in operating a child care service. The area of dispute was whether it should be inferred that the Delegate failed to have regard to that mandatory consideration.

58    In that respect, the applicant submitted that it is a requirement under s 46 of the Minister’s Rules that the Secretary must make findings upon each of the considerations set out in s 46 and that, in the absence of a finding about a relevant matter, an inference can be drawn by the Court that the matter was not taken into account, referring to Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1640 at [29]. The applicant argued that, in this case, it is clear that the Delegate did not have regard to the experience and expertise of the applicant given the absence of any reference to that matter.

59    As explained in Minister for Immigration and Multicultural Affairs v Yusuf(2001) 206 CLR 323 (Yusuf), the question of what inferences should be drawn from the decision-maker’s reasons, including the failure to refer to a matter, depends upon the statutory context within which the reasons were produced. Yusuf concerned a migration decision of the Administrative Appeals Tribunal to which s 430(1) of the Migration Act 1958 (Cth) applied which required the Tribunal to prepare a written statement setting out the findings on any material question of fact. In that context, Gleeson CJ observed that, if the Tribunal’s reasons do not set out a finding on a question of fact, “that will indicate that it made no finding on that matter, and that in turn, may indicate that the Tribunal did not consider the matter to be material”: Yusuf at [5]; see also at [69] (McHugh, Gummow and Hayne JJ). However, as Gleeson CJ also explained, “[b]y setting out its findings, and thereby exposing its views on materiality, the Tribunal may disclose a failure to exercise jurisdiction, or error of a kind falling within a ground in s 476(1) other than s 476(1)(a), or may provide some other ground for judicial review” (Yusuf at [10]). To the same effect are the observations made in Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 by French CJ and Kiefel J at [31] and Gummow J at [64]. As subsequent decisions of the Full Court of the Federal Court show, what inference should be drawn from a failure to refer to some fact or matter requires a consideration of the totality of the reasons: Minister for Immigration and Border Protection v SZSRS [2014] FCAFC 16; 309 ALR 67 at [34]; Minister for Immigration and Border Protection v Sabharwal [2018] FCAFC 160 at [76]; Minister for Home Affairs v Ogawa (2019) 269 FCR 536 at [103].

60    The Administration Act does not expressly require the Secretary to give reasons for an exercise of power under s 195H(1). However, s 199A provides that, before such an exercise of power, the Secretary must give a notice to the provider concerned that states that the Secretary is considering exercising the power, sets out the grounds for doing the thing, summarises the evidence and other material on which those grounds are based and invites submissions. The Secretary complied with that obligation in the present case. Then, when giving the cancellation notice to the provider, the Delegate also provided reasons in similar form to the reasons provided prior to the decision. Having regard to that statutory context, in my view the cancellation reasons should be understood as a statement by the Delegate of the grounds for giving the cancellation notice and a summary of the evidence and other material on which the grounds are based. That view is consistent with the cancellation decision which described the cancellation reasons as the “reasons for my decision, including the findings I have made and the evidence that supports those findings”.

61    Understood in that context, it was not necessary for the Delegate to refer to every piece of evidence that had been provided to the Delegate, nor to the Delegate’s findings on every consideration to which the Delegate had regard: c.f. Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 236 FCR 593 at [46]-[47]. The cancellation reasons are to be understood as focussed on the grounds for the cancellation, and the evidentiary basis for those grounds.

62    Considering the cancellation reasons as a whole, I am not prepared to infer that the Delegate failed to have regard to the experience and expertise of the applicant and others involved in the operation of Billan Family Day Care. Rather, I infer that the Delegate did not consider that that matter carried any significant weight in deciding whether the applicant was a fit and proper person to be involved in the administration of CCS and ACCS. While the Delegate was required to apply an active mental process to the consideration, the weight to be given to the mandatory relevant considerations was a matter for the Delegate. It was open for the Delegate to conclude, in light of other considerations taken into account, that the applicant’s expertise and experience carried little weight in the present case. As noted earlier, the statutory criteria is not whether the applicant is a fit and proper person to operate a family day care service; it is whether the applicant is a fit and proper person to be involved in the administration of CCS and ACCS. The Delegate’s decision was focussed on the extensive non-compliance by Billan Family Day Care with the family assistance law, resulting in the payment of child care subsidies for thousands of sessions of day care for which there was no entitlement. In that context, I infer that the Delegate was not persuaded that the applicant’s experience or expertise was material to her decision. I do not infer that the Delegate failed to have regard to that matter.

Conclusion on ground 2

63    In conclusion, I reject ground 2 of the application for review.

E.    Ground 1

Overview

64    In relation to ground 1, the applicant contends that, in deciding whether to impose a sanction on the applicant and which sanction to impose, the Delegate misconstrued the meaning of the word “reckless” in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules.

65    As set out earlier, s 195H(1) empowers the Secretary to impose various sanctions on an approved provider, including cancellation of the provider’s approval, if the Secretary is satisfied that the approved provider has not complied, or is not complying, with a condition for continued approval of the provider. In the present case, the Secretary was so satisfied and I have rejected the applicant’s challenge to that finding.

66    Section 195H(2) provides that, in exercising a power under subsection (1), the Secretary must have regard to any matters prescribed by the Minister’s Rules. The relevant matters are set out in s 52 of the Minister’s Rules. There was no dispute that the matters referred to in s 52 were mandatory considerations for the Secretary in exercising the sanctions power in s 195H(1). It should also be noted that s 52(2) stipulates the section does not limit the matters the Secretary may take into account for that purpose.

67    Relevantly, s 52(3)(d) provides that, in deciding whether to impose a sanction on the provider, the Secretary must take into account whether the provider’s non-compliance involves the deliberate or reckless giving of inaccurate, false or misleading information to the Secretary. Section 52(4)(b)(ii) provides that, in considering which sanction to impose, the Secretary must take into account 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.

68    In applying s 52(3)(d), the Delegate construed the word “reckless” in accordance with its dictionary meaning. The Delegate observed that the Macquarie Dictionary definition is “utterly careless of the consequences of action; without caution” and “characterised by or proceeding from such carelessness” and the definition of “careless” is “not paying enough attention to what one does; not exact or thorough; done or said heedlessly or negligently; unconsidered” and “not caring or troubling; having no care or concern; unconcerned”. The Delegate found (at [446]) of the cancellation reasons) that:

(a)    the applicant’s non-compliance with the family assistance law involved the reckless giving of inaccurate information because it was (at the least) characterised by carelessness and the applicant had not been exact or thorough in meeting the obligations under the family assistance law; and

(b)    the applicant had demonstrated a reckless disregard for the obligation to comply with the condition for continued approval and lack of ability to understand its obligations under the family assistance law.

69    Similarly, in applying s 52(4)(b)(ii), the Delegate found (at [454] of the cancellation reasons) that a number of documents provided to the Department by the applicant appeared to be false, inaccurate or misleading which indicated a reckless disregard of the applicant’s obligation to comply with the family assistance law.

Applicant’s submissions

70    The applicant argued that the word “reckless” in the Minister’s Rules should be construed consistently with the meaning given to that expression in Division 3 of Part 6 of the Administration Act which creates offences where a person makes or presents a false or misleading statement or document in connection with a claim for family assistance and the person is reckless as to whether the statement or document is false or misleading. The applicant observed that Chapter 2 of the Criminal Code 1995 (Cth) (Criminal Code) applies to offences under the Administration Act by virtue of s 3A of the Administration Act. Section 5.4 of the Criminal Code defines recklessness as follows:

(1)     A person is reckless with respect to a circumstance if:

(a)    he or she is aware of a substantial risk that the circumstance exists or will exist; and

(b)     having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(2)     A person is reckless with respect to a result if:

(a)     he or she is aware of a substantial risk that the result will occur; and

(b)     having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

71    The applicant contended that the meaning of the term “reckless” in the Administration Act must be read consistently throughout the legislative scheme, including in the Minister’s Rules being a legislative instrument made under the Administration Act. In support of that contention, the applicant relied on s 13 of the Legislation Act 2003 (Cth) which provides as follows:

(1)     If enabling legislation confers on a person the power to make a legislative instrument or notifiable instrument, then, unless the contrary intention appears:

…

(b)     expressions used in any instrument so made have the same meaning as in the enabling legislation as in force from time to time;

…

72    The applicant also relied on the principle of statutory construction that, as far as possible, a word should be given a consistent meaning throughout a statute: Craig Williamson Pty Ltd v Barrowcliff (1915) VR 450 at 452 (Hodges J).

73    The applicant also argued that, even without the application of the Criminal Code, the term “reckless” has a specific legal meaning (which is consistent with the Criminal Code) and, as a general rule of construction, Parliament is presumed to have used words that have a legal meaning in their legal sense unless a contrary intention appears: Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 580 (Lord Macnaghten). As to the legal meaning of the word “reckless”, the applicant relied on Reed (Albert E) and Co Ltd v London and Rochester Trading Co Ltd [1954] 2 Lloyds Rep 463 in which Devlin J said (at 475) that recklessness “means deliberately running an unjustifiable risk”. The applicant submitted that recklessness means more than just carelessness or giving information that is inaccurate. In that regard, the applicant referred to the following statement of Spender J (dissenting as to the outcome) in Hart v Commissioner of Taxation (2003) 131 FCR 203 (at [33]):

It is not reckless simply to make a claim that is erroneous. Nor, in my view, is it reckless to make a claim, 'knowing there is a real risk that the claim might be wrong;' c.f. the observations of Cooper J in BRK (Bris) Pty Ltd v Commissioner of Taxation [2001] FCA 164; (2001) 46 ATR 347 at 364. If a jockey knows that in a horse race there is a real, as opposed to a fanciful, risk of serious injury or death involved in participation in the race, it would not be reckless conduct on the part of the jockey according to the proper meaning of the word 'reckless', to take part in the horse race. So, too, a driver in a Formula 1 motor vehicle race. Recklessness consists in making a claim, not caring whether the claim is true or false.

74    The applicant submitted that the Delegate erred because he or she failed to consider the applicant’s state of mind in giving information to the Secretary. The Delegate ought to have considered whether or not the applicant knew or ought to have known of the risk of the information being inaccurate and gave the information without caring whether it was inaccurate. The Delegate also failed to consider the applicant’s state of mind in relation to compliance with the conditions for continued approval. The Delegate ought to have considered whether or not the applicant knew or ought to have known of the risks of the non-compliance and acted without caring whether there was compliance.

Secretary’s submissions

75    The Secretary submitted that the meaning given to the word “reckless” in the Criminal Code has no application to the construction of s 52 of the Minister’s Rules, as the section is not concerned with an offence against the Administration Act. Rather, the word should be construed in accordance with its ordinary meaning: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 (Alcan) at [4], [47].

76    The Secretary submitted that the dictionary definition of “reckless”, adopted by the Delegate, is very similar to the meaning given to the word in Shawinigan Ltd v Vokins and Co Ltd [1961] 3 All ER 396 (Shawinigan) in which Megaw J said (at 403) that recklessness is “gross carelessness” or “a high degree of carelessness”. Shawinigan concerned the construction of an exclusion clause applicable to contracts for the carriage of goods on the river Thames in London. The clause excluded liability for loss or damage caused by unseaworthiness of craft, except damage caused by unseaworthiness where the defendants “knowingly or recklessly supplied an unseaworthy barge for the service at the time of the commencement of the voyage to the ship, wharf or quay to load." In that context, Megaw J rejected an argument that “recklessly” meant that the defendant was subjectively aware of an unjustifiable risk and deliberately chose to run the risk. His Honour concluded (at 403):

In my view, "recklessly" means grossly careless. Recklessness is gross carelessness -the doing of something which in fact involves a risk, whether the doer realises it or not; and the risk being such having regard to all the circumstances, that the taking of that risk would be described as "reckless". The likelihood or otherwise that damage will follow is one element to be considered, not whether the doer of the act actually realised the likelihood. The extent of the damage which is likely to follow is another element, not the extent which the doer of the act, in his wisdom or folly, happens to foresee. If the risk is slight and the damage which will follow if things go wrong is small, it may not be reckless, however unjustified the doing of the act may be. If the risk is great, and the probable damage great, recklessness may readily be a fair description, however much the doer may regard the action as justified and reasonable. Each case has to be viewed on its own particular facts and not by reference to any formula. The only test, in my view, is an objective one. Would a reasonable man, knowing all the facts and circumstances which the doer of the act knew or ought to have known, describe the act as "reckless" in the ordinary meaning of that word in ordinary speech? As I have said, my understanding of the ordinary meaning of that word is a high degree of carelessness. I do not say "negligence", because "negligence" connotes a legal duty.

Consideration

77    There was no dispute between the parties that the Minister’s Rules are delegated legislation and that, when interpreting delegated legislation, the ordinary principles of statutory construction apply: Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 398. Those principles are well known. The starting point is the ordinary meaning of the words of the provision, but the words must be read contextually and in light of the objects of the statutory provision: Alcan at [4] (French CJ) and [47] (Hayne, Heydon, Crennan and Kiefel JJ).

78    The word “reckless” is used in the law in different ways: Banditt v The Queen (2005) 224 CLR 262 (Banditt) at [2] (Gummow, Hayne and Heydon JJ). In the criminal law, it usually takes a meaning similar to that which has been codified in s 5.4 of the Criminal Code, involving a subjective awareness of a risk that a particular event might occur and a careless disregard of that risk. In civil law, the word may connote an objective awareness of a risk (in the sense that the relevant person ought to have appreciated the risk) and a carelessness in respect of the risk: Banditt at [36]. The difference between the two meanings was discussed by Gummow, Hayne and Heydon JJ in Banditt as follows (citations omitted):

2    When “reckless” is used in applying the principles of the tort of negligence, the yardstick is objective rather than subjective. On the other hand, to sustain an action in deceit, fraud is proved when it is shown “that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false”. But (3) is but an instance of (2) because, as Lord Herschell put it in Derry v Peek: “[O]ne who makes a statement under such circumstances can have no real belief in the truth of what he states.” This reasoning is akin to that which supports the evidentiary inference explained by Lord Esher MR as being that one who wilfully shuts his eyes to what would result from further inquiry may be found to know of that result.

3    To these expositions of the civil law by Lord Herschell and Lord Esher there may be added the following statement by Lord Edmund-Davies in his dissenting speech in Commissioner of Metropolitan Police v Caldwell:

So if a defendant says of a particular risk, ‘It never crossed my mind,’ a jury could not on those words alone properly convict him of recklessness simply because they considered that the risk ought to have crossed his mind, though his words might well lead to a finding of negligence. But a defendant’s admission that he ‘closed his mind’ to a particular risk could prove fatal, for, ‘A person cannot, in any intelligible meaning of the words, close his mind to a risk unless he first realises that there is a risk; and if he realises that there is a risk, that is the end of the matter’.

79    The question of construction to be resolved in the present case is: what meaning was conveyed by the word “reckless”, as part of the phrase “deliberate or reckless”, in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules? To resolve that question it is necessary to consider the context in which the word is used.

80    Section 52 of the Minister’s Rules prescribes matters to be taken into account by the Secretary in exercising a power under s 195H(1) of the Administration Act to impose a sanction on an approved provider for a failure to comply with a condition for continued approval: see s 195H(2). As set out above, s 52(3)(d) requires the Secretary to take into account whether the provider’s non-compliance involves the deliberate or reckless giving of inaccurate, false or misleading information to the Secretary and s 52(4)(b)(ii) requires the Secretary to take into account 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.

81    At a general level, it might be said that those sections require the Secretary to consider the deliberateness of the provider’s non-compliance. It is understandable that the deliberateness of the non-compliance is relevant to the decision whether to impose a sanction and the form of sanction to impose. As observed by the Full Federal Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [129], in the context of s 224 of the Australian Consumer Law (which requires the Court to have regard to the deliberateness of the infringing conduct in assessing the imposition of a pecuniary penalty as part of the circumstances in which the contravention occurred), deliberateness is a spectrum from knowing contravention through to innocent contravention. In such a context, the word “reckless” can include objective as well as subjective recklessness, and a requirement to consider whether non-compliance is deliberate or reckless may take the meaning that all states of mind are relevant to be considered (as the Full Federal Court put it at [131], “be it a deliberate flouting of the law, recklessness, wilful blindness, ‘courting the risk’, negligence, or innocence or any other characterisation of state of mind”).

82    However, two contextual considerations point away from that broad construction of the phrase in s 52(3)(d) of the Minister’s Rules. First, the section is expressly directed to whether the non-compliance was deliberate or reckless. The section does not refer more generally to the circumstances in which the non-compliance occurred (as per s 224(2) of the Australian Consumer Law). The use of the phrase “deliberate or reckless” as the relevant criteria indicates that the section is concerned with the providers subjective state of mind. That conclusion is reinforced by the second contextual consideration. As observed by the applicant, s 52(3)(d) has a close connection with certain of the offence provisions in Division 3 of Part 6 of the Administration Act. Those provisions make it an offence for a person to make a false or misleading statement, or provide a false or misleading document, in connection with a claim for family assistance or the family assistance law, where the person is reckless as to whether the statement or document is false or misleading. The word “reckless” in those offence provisions takes its meaning from s 5.4 of the Criminal Code. The reference in s 52(3)(d) to the deliberate or reckless giving of inaccurate, false or misleading information to the Secretary appears to be a reference to conduct that would constitute an offence under Division 3 of Part 6 of the Administration Act. As such, the word “reckless” ought be understood with the meaning given by s 5.4 of the Criminal Code - a subjective awareness of a risk that a particular event might occur and a careless disregard of that risk.

83    In my view, those contextual considerations indicate that the word “reckless” in s 52(3)(d) means that the approved provider has a subjective awareness that there is a risk that information given to the Secretary is inaccurate, false or misleading and has carelessly disregarded that risk. Given the similarity of its use in s 52(4)(b)(ii), in my view it must follow that the word “reckless” has the same meaning in that section; that is, that the provider has a subjective awareness that there is a risk that the provider has or will fail to comply with the conditions for continued approval and has carelessly disregarded that risk.

84    Since this proceeding was argued before me, Rares J delivered judgment in Al-Huda, which addressed the very same issue of construction that is before me - the meaning of the word “reckless” in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules. His Honour likewise concluded that the word “reckless” is used in the sense of the criminal law, require a subjective awareness of a risk that is ignored (at [36] and [37]). I respectfully agree with his Honour’s reasoning and conclusion.

85    I therefore accept the applicant’s submission that the Delegate erred in his or her consideration of s 52(3)(d). It is clear that at [446] of the cancellation reasons, when considering s 52(3)(d), the Delegate adopted the dictionary definition of reckless which conveys objective recklessness – that is, carelessness but without a subjective awareness of risk. The Delegate found that “the Provider’s non-compliance involves frequent ‘reckless’ giving of inaccurate information as it is clearly characterised by, at the very least, carelessness”. The Delegate was unable to conclude that the applicant’s failures were deliberate.

86    I also accept the applicant’s submission that the Delegate applied the same meaning of the word “reckless” when considering s 52(4)(b)(ii). The Delegate did not discuss the meaning of the phrase “deliberate or reckless” in that context, but it can be readily inferred that the Delegate applied the same meaning as he or she gave to the equivalent phrase in s 52(3)(d). At [454] of the cancellation reasons, when considering s 52(4)(b)(ii), the Delegate concluded that a “number of documents provided to the department by the Provider appear to be false, inaccurate or misleading which indicates a reckless disregard of the Provider’s obligation to comply with the family assistance law”. Essentially, that finding repeated the finding made in respect of s 52(3)(d) and it can be inferred that that finding was based on the same erroneous interpretation of the word “reckless”.

87    Having concluded that the Delegate applied an erroneous meaning to the word “reckless” when considering the matters referred to in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules, it is necessary to consider whether the error was material to the Delegate’s decision in the sense explained in Bond – whether the decision might have been different but for the error. The onus on that issue is on the applicant (SZMTA at [4], [41] and [46], in the analogous common law context). In answering that question, it is important to avoid being drawn into an assessment of the merits of the Delegate’s decision (SZMTA at [48]). The task of weighing the numerous mandatory statutory considerations is a task entrusted to the Secretary, not to the Court. It is not for the Court to substitute its own assessment of those considerations. Rather, the task of the Court is to determine whether, having regard to the Delegate’s findings and the nature of the error that has been identified, it is realistically possible that the Delegate might have come to a different conclusion if the error had not been made. In the analogous common law context, realistically possible means a possibility that is not fanciful or improbable: see Hossain at [30] and SZMTA at [68]-[71] as discussed in Chamoun v Minister of Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 66 at [66] (Mortimer and Bromwich JJ), DNQ18 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 72 at [60] (McKerracher, Mortimer and White JJ) and PQSM v Minister for Home Affairs [2020] FCAFC 125 at [138]-[143] (Banks-Smith and Jackson JJ).

88    Having regard to the cancellation reasons as a whole, I am satisfied that the Delegate’s erroneous interpretation of the word “reckless” in ss 52(3)(d) and (4)(b)(ii) of the Minister’s Rules was not material to his or her decision. That conclusion flows from a consideration of the core findings of the Delegate that underpinned his or her reasoning.

89    First, in deciding that the applicant had failed to comply with the condition for continued approval to be a fit and proper person to be involved in the administration of CCS and ACCS, the Delegate explained (in the table at [425] of the cancellation reasons) that the applicant:

(a)    had a poor record of compliance with family assistance law including in particular inaccurate reporting where no care had been provided, reporting care for whom no-one was eligible and incorrect identification of educator details;

(b)    the applicant had not demonstrated that she had instituted or can maintain effective governance arrangements to ensure compliance with the family assistance law and, despite having been provided with education, information and previous notification of apparent non-compliance, the applicant had been unable to set good governance practices in place to ensure compliance with the family assistance law and continued to have poor governance procedures and inadequate arrangements in place, resulting in further non-compliance with the family assistance law ; and

(c)    the applicant had demonstrated a poor record of administering Commonwealth funds and multiple occasions had been identified when the applicant failed to provide accurate reports, which is a primary obligation as it allows the determination of an individual’s eligibility to receive child care fee assistance, along with the amount of the entitlement.

90    In the same context, the Delegate also found that he or she could draw “any or all” of the following conclusions:

(a)    the applicant may be aware of her obligations, but has chosen not to comply with those obligations;

(b)    the applicant’s governance and administration practices are insufficient to ensure compliance with the family assistance law; and

(c)    the applicant lacks the ability to understand her obligations.

91    The statement that the Delegate could draw “any or all” of the above conclusions is somewhat difficult to understand. Logically, it is not possible to reach both the first and the third conclusions. If the applicant lacked the ability to understand her obligations, the applicant could not have been aware of her obligations and chosen not to comply with them. Reading the cancellation reasons beneficially and without an eye attuned to the perception of error (Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272), I understand the Delegate’s reasoning to be that it was open on the evidence to reach any of the three findings and that, on the basis of any of the three findings, the Delegate considered that the applicant was not a fit and proper person to be involved in the administration of CCS and ACCS. In those circumstances, it was not necessary to make a final determination of which circumstance applied to the applicant – deliberate non-compliance, poor governance or a lack of ability to understand her obligations.

92    Second, in deciding whether to impose a sanction, the Delegate concluded that (at [442]-[450] of the cancellation reasons):

(a)    the applicant’s non-compliance formed part of a history of contraventions by the applicant which had occurred over a period of more than three years;

(b)    the non-compliance had resulted in the overpayment of CCS and ACCS and was likely to continue to result in the overpayment of CCS and ACCS;

(c)    the applicant’s non-compliance involved frequent giving of inaccurate information to the Secretary which had been, at the very least, careless;

(d)    the non-compliance was serious in nature due to the large number of different types of contraventions, the quantity and ongoing repetition of contraventions;

(e)    the safety, health and wellbeing of children may have been placed at risk;

(f)    the amount of child care subsidies paid by the Commonwealth as a result of the applicant reporting inaccurate sessions was a relevant aggravating factor;

(g)    the applicant’s lack of capacity to understand her obligations and her inadequate governance processes were large contributors to the non‐compliance that occurred;

(h)    the applicant had not had appropriate measures in place to prevent the non-compliance from occurring, and certain measures put in place as a result of being notified of non-compliance had proved ineffectual, as non-compliance had continued after the measures were purportedly implemented.

93    Third, in deciding which sanction to impose, the Delegate concluded that (at [454] of the cancellation reasons):

(a)    the non-compliance had been of a systemic and ongoing nature, having occurred over a number of years, and involving approximately 41,434 separate contraventions ;

(b)    the non-compliance appears to have resulted in significant and multiple overpayments of CCS and ACCS;

(c)    a number of documents provided to the department by the Provider appear to be false, inaccurate or misleading which indicated a reckless (in the sense of objective carelessness) disregard of the applicant’s obligation to comply with the family assistance law;

(d)    it was likely that overpayments would continue to occur if the applicant continued to operate the services;

(e)    the non-compliance suggested that the applicant was no longer a fit and proper person to provide a child care service;

(f)    the non-compliance constituted an unacceptable risk to the safety, health and wellbeing of children being cared for in the child care services for which the applicant is approved; and

(g)    the applicant had previously been made aware of instances of apparent non-compliance with the family assistance law, yet had continued to fail to meet her obligations.

94    In the same context, the Delegate again found that he or she could draw “any or all” of the following conclusions:

(a)    the applicant may be aware of her obligations, but had chosen not to comply with those obligations;

 (b)    the applicant’s governance and administration practices were insufficient to ensure compliance with the family assistance law; and

(c)    the applicant lacked the ability to understand her obligations.

95    For the reasons already given, I understand that finding to be that it was open on the evidence to reach any of the three findings and that, on the basis of any of the three findings, the Delegate considered that it was appropriate to cancel the applicant’s provider approval. In those circumstances, it was not necessary to make a final determination of which circumstance applied to the applicant – deliberate non-compliance, poor governance or a lack of ability to understand her obligations.

96    In my view, it is clear from the Delegate’s reasons that the Delegate did not place any material weight on the consideration whether the applicant’s provision of inaccurate information to the Secretary was deliberate or reckless within the meaning of the Criminal Code. Rather, the Delegate’s reasons show that the material considerations taken into account were the extent of inaccurate information provided by the applicant, the failure to improve having been notified of problems and the likelihood of ongoing non-compliance. It was those factors that led the Delegate to conclude that it was open to find that the applicant’s failure to comply with her obligations was due to deliberate non-compliance, poor governance or a lack of ability to understand the obligations, but that the sanction of cancellation was appropriate regardless of which finding was made. In other words, even if the applicant’s provision of inaccurate information to the Secretary was due to an inability on the part of the applicant to understand her obligations, in all the circumstances cancellation was the appropriate sanction to impose.

97    A finding that the applicant lacked the ability to understand her obligations necessarily means that the applicant was unaware of the risk of inaccurate information being provided to the Secretary in breach of her obligations under the family assistance law (and therefore the provision of inaccurate information was not reckless within the Criminal Code meaning). It therefore follows from the Delegate’s reasoning that the erroneous construction of “reckless” could not have affected the Delegate’s decision. The Delegate did not consider it relevant to determine whether the applicant was subjectively reckless and a fortiori did not consider that a finding of subjective recklessness was necessary to support a decision to cancel the applicant’s provider approval. The Delegate considered that cancellation was appropriate on the “lower” basis that the applicant lacked the ability to understand her obligations.

Conclusion on ground 1

98    In conclusion, I reject ground 1 of the application for review.

F.    Orders

99    For the reasons explained in this judgment, the applicant’s originating application will be dismissed with costs.

100    As noted above, on 25 June 2020 the Court made the following order (the stay order):

Upon the applicant through its legal representative providing the usual undertaking as to damages, the provider approval cancellation decision made by the respondent in respect of the applicant on 7 May 2020 (the cancellation decision) be stayed until the final determination of the applicant’s originating application for judicial review of the cancellation decision or further order.

101    It follows from the dismissal of the applicant’s originating application that the stay should be lifted. At the hearing of the originating application, the applicant indicated that she wished to be heard on the timing for the lifting of the stay. It will also be necessary to determine whether the Secretary wishes to make any application in respect of the applicant’s undertaking as to damages.

102    In the circumstances, I propose to make orders dismissing the applicant’s originating application and lifting the stay, with the lifting of the stay to take effect 14 days after the date of judgment. I will also give the parties liberty to apply within 10 days of the date of judgment to vary the date by which the lifting of the stay takes effect or to seek further orders consequent upon the reasons for judgment of the Court and, in the case of the Secretary, to apply for damages pursuant to the applicant’s undertaking.

Associate:

Dated:    7 December 2020