Federal Court of Australia

Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills and Employment (No 3) [2021] FCA 1537

ORDERS

THE COURT ORDERS THAT:

1.    The applicant pay damages to the respondent, on behalf of the Commonwealth of Australia, in the amount of $354,682.60.

2.    Subject to order 3, the applicant pay the respondent’s costs of the application for damages.

3.    The applicant has liberty to apply within 14 days to seek a variation of order 2.

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

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    The respondent, the Secretary of the Department of Education, Skills & Employment (Secretary), representing the Commonwealth of Australia, applies to the Court for an order for the payment of damages by the applicant to the Commonwealth pursuant to an undertaking as to damages given by the applicant on 25 June 2020 in connection with the grant of a stay order, described below. The application is opposed by the applicant.

2    The applicant, Ms Sagal Mohamed, was the operator of a child care service under the trading name Billan Family Day Care. The service was approved by the 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.

3    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).

4    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) and orders setting aside the cancellation decision.

5    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 delivered a decision on an 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, the Court granted a stay of the cancellation decision until the final determination of the applicant’s originating application (referred to herein as the stay order): Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills & Employment [2020] FCA 900. As defined by paragraph 2.2 of the Court’s Usual Undertaking as to Damages Practice Note (GPN-UNDR), the “usual undertaking as to damages” is an undertaking to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person affected by the operation of the interlocutory order.

6    On 7 December 2020, the Court dismissed the applicant’s originating application and made orders lifting the stay of the cancellation decision with effect on 21 December 2020: Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills & Employment (No 2) [2020] FCA 1749. The Secretary was given liberty to apply for damages pursuant to the applicant’s undertaking given on 25 June 2020. The Secretary exercised that liberty and, on 15 December 2020, orders were made for the filing of evidence and submissions on the question of damages.

7    In support of the application, the Secretary read two affidavits of Teresa Mathers affirmed 25 January 2021 and 21 June 2021. In opposition, the applicant read an affidavit affirmed by herself on 2 March 2021 and an affidavit of Isabella Kate Royce affirmed 30 June 2021. The application was heard on 5 July 2021. During the hearing, the Secretary was given leave to file supplementary evidence in support of the application. The Secretary filed an affidavit of Genevieve Ilic affirmed 5 July 2021. The deponents of the affidavits were not cross-examined. On 9 July 2021, the Court received a note by way of email sent by counsel for the Secretary with the agreement of counsel for the applicant, explaining an aspect of the eligibility criteria for the receipt of child care subsidies.

8    I have determined that the applicant should pay the Commonwealth the amount of $354,682.60 in damages to compensate the Commonwealth for COVID-19 related payments made to the applicant that would not have been paid had the stay order not been granted. These are my reasons for that determination.

Factual findings

9    It is common ground that the effect of the stay order was to enable Billan Family Day Care to continue to operate from 28 June 2020 until 20 December 2020 (stay period).

10    Throughout the stay period, Billan Family Day Care continued to provide child care services. As at 28 June 2020, Billan Family Day Care engaged 38 educators who cared for 227 children. When the stay period ended on 20 December 2020, Billan Family Day Care had 28 educators caring for 145 children. Separately, the Secretary has provided evidence, which the applicant accepts, that in total, 286 children received approved child care services from the applicant after 13 July 2020. Neither party offered an explanation for this discrepancy in figures, however I infer that a number of children must have joined and left Billan Family Day Care in the course of the stay period (bringing the total number of children who received care during the stay period, albeit not for the entire period, to 286). Since the parties are ultimately in agreement on the total amounts paid by the Commonwealth to the applicant during the stay period, and the character of those payments, I am able to make a determination regarding damages without further clarity on this point.

11    Because the applicant retained approval under s 195 of the Administration Act during the stay period, eligible parents who used Billan Family Day Care services were entitled to receive subsidies from the Commonwealth for the child care services, meaning they did not pay the full hourly rates charged by Billan Family Day Care.

12    From 13 July 2020 until 20 December 2020 inclusive, the Secretary paid the applicant a total net amount of $921,971.28 in child care subsidies (comprising Child Care Subsidy (CCS) and Additional Child Care Subsidy (ACCS) payments, less amounts recovered by the Commonwealth through reductions in payment and off-setting) for the applicant’s Victorian service. No child care subsidy payments were made between 28 June 2020 and 12 July 2020 inclusive because the “Coronavirus Response Business Continuity Payment” (Business Continuity Payment) (referred to in the following paragraph) was paid in lieu of subsidies for this period.

13    The applicant received COVID-19 related payments from the Commonwealth from 6 April 2020 (before the stay period began) to 27 September 2020. Those payments were a weekly Business Continuity Payment from 6 April 2020 to 12 July 2020 and a weekly “Transition Payment” from 13 July 2020 to 27 September 2020 (Transition Payment). Each of these weekly payments were calculated as a proportion of the applicant’s deemed average weekly fee revenue, based on the fortnight starting 17 February 2020, rather than the hours of care provided to children during the period 6 April 2020 to 27 September 2020. For the 15 days of the stay period (28 June 2020 and 12 July 2020 inclusive) in which the applicant received the Business Continuity Payment, there was no obligation upon parents of children who were receiving care from the applicant to pay any fees towards the cost of the child care that they were receiving, nor was any child care subsidy paid to the applicant by the Secretary for that period. In contrast, child care subsidy payments were re-introduced for the period in which the Transition Payments were paid.

14    The applicant received a total of $354,682.60 in COVID-19 related payments as an approved provider of child care services during the period 28 June 2020 to 27 September 2020, consisting of $107,218.07 in Business Continuity Payments and $247,464.53 in Transition Payments.

Secretary’s submissions

15    As the Secretary’s first submission, the Secretary placed reliance on paragraph 27 of my reasons for judgment dated 25 June 2020 (stay reasons) which stated as follows:

In my view, it is appropriate to grant a stay of the cancellation decision on the condition that the applicant gives the usual undertaking as to damages. If the applicant is unsuccessful in this proceeding, it will have been paid child care subsidies by the Commonwealth which, but for the stay, it would not have been entitled to receive. While the subsidies are due to the individuals whose children are provided with care at Billan Family Day Care, the subsidies are paid to the applicant and the applicant charges its clients lower hourly rates for its services. In my view it is appropriate, as a condition of the stay, that if the applicant is ultimately unsuccessful on its application for review under the ADJR Act, the applicant undertake to repay to the respondent the child care subsidies received in the period from 28 June 2020. I note that such undertakings were given in the same context in each of Galaxy and Azaria.

16    The Secretary submitted that paragraph 27 made it a condition of the stay that, if the applicant were unsuccessful in the judicial review proceeding, the applicant would undertake to repay to the Commonwealth the child care subsidies it received from 28 June 2020 when the stay became effective. On that basis, the Secretary sought repayment of the entirety of the child care subsidies paid.

17    The Secretary’s second submission was that, irrespective of whether paragraph 27 of the stay reasons expressed a condition of the stay, the applicant should be ordered to pay, by way of damages, both the amount of the child care subsidy payments and the COVID-19 related payments.

18    In relation to the child care subsidy payments, the Secretary’s primary submission was that, had the stay not been granted, none of the $921,971.28 that the Secretary paid to the applicant between 13 July 2020 and 20 December 2020 in child care subsidies would have been paid to the applicant. In other words, absent the stay, the applicant’s provider approval would have been cancelled effective 28 June 2020 and the applicant would not have been eligible for the receipt of subsidies from the Commonwealth. The Secretary’s secondary submission, put in the alternative, recognised that, if the stay order were not made and the applicant’s business ceased to operate as from 28 June 2020, many of the children attending Billan Family Day Care would be likely to have attended another child care service (in respect of which the Commonwealth would have paid the same child care subsidies). In that respect, the Secretary adduced evidence that, of the 286 children recorded as receiving approved child care services from the applicant after 13 July 2020, 80 of those children did not receive child care from another approved child care provider as at 28 February 2021 (Billan Family Day Care having ceased operations at the expiry of the stay period on 20 December 2020). On the basis of that evidence, the Secretary submitted that the Court should infer that, had the stay order not been granted and the applicant’s business ceased operations as at 28 June 2020, about 80 children would not have transferred to another approved child care service. The subsidies paid by the Commonwealth for those 80 children during the stay period totalled $318,190.83.

19    In relation to the COVID-19 related payments, the Secretary submitted that the applicant would not have been eligible to receive any of those payments had it not been an approved provider during the stay period, or had it elected to give notice of voluntarily suspending approval for receipt of subsidies and continued to charge full fees to parents using their child care service. The Secretary further submitted that, had the stay not been granted, and had all the children attending Billan Family Day Care transferred to other approved child care providers after 28 June 2020, the Commonwealth would have saved the amount of the COVID-19 related payments paid to the applicant. Those amounts would not have been payable to the other approved child care providers to whom the children may have transferred because the payments were based on deemed average weekly fee payments of the service provider in the prescribed fortnight of 17 February 2020 to 2 March 2020 (which predated the assumed closure of Billan Family Day Care and the transfer of children).

Applicant’s submissions

20    In response to the Secretary’s first submission concerning paragraph 27 of the stay reasons, the applicant submitted that the grant of the stay was conditional only on the usual undertaking as to damages set out in the GPN-UNDR.

21    In respect of the child care subsidy payments, the applicant submitted that these payments are an entitlement of individuals who are eligible for subsidised child care services. The payments were paid to the applicant, who was required to pass the subsidy on to the eligible individual as a reduction or rebate on the amount the individual was liable to pay for care. The applicant submitted that these individuals’ entitlement to the subsidy existed independently and was not a product of the application for review or the stay.

22    The applicant further submitted that the care for which the subsidies were paid was actually provided by Billan Family Day Care, and that the payment of child care subsidies to the applicant during the period of the stay was the Secretary providing subsidies to eligible individuals, as it was required to do. The applicant therefore submitted that these payments did not constitute loss or damage to the Commonwealth. In the applicant’s submission, had the stay not been granted, the Secretary would have paid the subsidies to an alternative child care provider who would have absorbed the children and hours of care that would have otherwise been provided by Billan Family Day Care.

23    In response to the alternative submission of the Secretary that, had the stay not been granted, the Commonwealth would not have needed to paid child care subsidies to another provider in respect of approximately 80 children, the applicant submitted that the evidence does not support this contention. The applicant submitted that the fact that 80 children did not receive care from another provider after the end of the stay period, in the next calendar year, does not support an inference that those 80 children would not have received care from another provider during the stay period. The applicant argued that there are various reasons why eligible individuals might not have sought care for their children after the stay period (whereas care would have been sought during the stay period), including that:

(a)    the need for care may have changed due to changed working arrangements;

(b)    financial circumstances may have changed such that care is no longer feasible;

(c)    families with school-aged children may have found alternative care arrangements; and

(d)    children may have commenced secondary school and so would not be in care.

24    In relation to point (d) above, it is apparent from further materials provided by the parties following the hearing that children aged 12 and 13 and attending secondary school are generally only eligible for CCS and ACCS in prescribed circumstances, namely where their parents have made a statutory declaration that their child cannot be left at home alone and that there is no adult able to provide suitable care.

25    In respect of the COVID-19 related payments, the applicant submitted that the Secretary had failed to prove that the Business Continuity Payments and Transition Payments paid to the applicant amounted to loss or damage. The payments replaced child care subsidies otherwise provided to eligible individuals and were paid to the applicant, who was required not to charge fees for sessions of care provided to children during the period the Business Continuity Payment was received, and limited to charging capped fees for sessions of care provided to children during the period the Transition Payment was received.

26    The applicant also disputed the Secretary’s contention that it would not have had to pay any of the $354,682.60 in COVID-19 related payments to another provider. The applicant submitted that the Secretary had provided no evidence in support of its contention that the children formerly with Billan Family Day Care would only receive care from providers who were operating during the prescribed fortnight and who would thus not receive payments for additional children in their care after that time. The applicant submitted that children may have received care from a new child care service provider. The “Transition Payment Guidelines” produced by the Department of Education, Skills and Employment stated (at p 24) that, for a new service, the Department would determine an appropriate reference fortnight to use for the calculation of the Transition Payment (which would typically be the service’s first fortnight in which it receives child care subsidies).

27    Finally, the applicant submitted that, should the Court be of the view that the child care subsidy payments and the COVID-19 related payments amounted to loss incurred as a result of the making of the stay order, the Court should nonetheless exercise its discretion not to enforce the applicant’s undertaking as to damages as to do so would be inequitable and contrary to public policy, particularly in the context of the making of orders requiring an undertaking as to damages in an administrative law context. The applicant submitted that the enforcement of the undertaking as to damages would not be just, both by virtue of the severe hardship faced by the applicant, and, it was submitted, the “unjust enrichment” of the Commonwealth. In support of the latter point, the applicant argued that having received the benefit of the services provided by the applicant during the stay period, the Commonwealth would, in effect, be unjustly enriched if it were permitted to claim the entire cost of those services back from the applicant.

Applicable legal principles

28    The applicable legal principles were not in dispute. Those principles were recently stated by Nicholas J in Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) (No 5) [2020] FCA 543; 151 IPR 237 at [177]-[186], [190]-[195] (Sanofi), and can be summarised as follows:

(a)    The equitable origins of an undertaking as to damages mean that the Court should favour an approach to assessing damages that is equitable, just and reasonable in the circumstances, and should not be constrained by any rigid rule. That said, in most cases it will be appropriate to award damages that flow directly from the relevant interlocutory order, and that could have been foreseen when the interlocutory application was granted: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 (Air Express) at 266-267 per Aickin J, cited with approval by French CJ, Gummow, Hayne, Heydon and Kiefel JJ in European Bank Limited v Robb Evans of Robb Evans & Associates (2010) 240 CLR 432 (European Bank) at 439 [18].

(b)    The party seeking to enforce the undertaking bears the onus of proving that the relevant loss was caused by the making of the interlocutory order, or, put differently, that it would not have suffered the loss “but for” the making of that interlocutory order: Air Express per Gibbs J at 313, Stephen J at 319-320 and Mason J at 324-325.

(c)    It is necessary to distinguish (where such a distinction exists) between damages flowing from the interlocutory order and those flowing from the litigation itself. Only the former is compensable: per Aickin J at first instance in Air Express (at 268); a principle with which Barwick CJ (at 309-310), Gibbs J (at 311-312) Stephen J (at 315), and Mason J (at 324) expressed agreement on appeal. The onus of proof remains the same – the party seeking to enforce the undertaking must prove that the damage sustained was caused by the making of the order, not the litigation generally: Air Express at 313 per Gibbs J.

29    I agree with Nicholas J’s assessment (Sanofi at [188], [192]) that the caution against the application of a rigid formulation in the assessment of damages should extend to the application of the “but for” test. The Court is bound to apply the standard of causal connection that most appropriately meets the purpose of the undertaking as to damages: European Bank at [16], citing Mason J in Air Express (at 324). The discussion of the “but for” test in the context of negligence resulting in personal injury in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 (March) is relevant insofar as the “but for” test should not be applied exclusively to produce an illogical or unjust conclusion, but rather should be applied “in a practical common sense way” (per McHugh J, March at 532).

Consideration

30    The Secretary bears the onus of proof in relation to each of the components of loss that it claims. Before considering the components of loss claimed by the Secretary, it is convenient to address some overarching matters raised by the parties in submissions.

Overarching matters

31    First, I do not accept the Secretary’s submission that the grant of the stay was subject to a condition based on paragraph 27 of the stay reasons. Paragraph 27 was not intended to operate as a condition to the grant of the stay or otherwise predetermine the Secretary’s claim for damages. The grant of the stay was only subject to the usual undertaking as to damages. In hindsight, paragraph 27 was inelegantly expressed.

32    Second, I do not accept the applicant’s submission that the Court should take into account the significant hardship that an order for damages as sought by the Secretary would cause the applicant. The authorities make clear that the purpose of requiring an undertaking as to damages is to compensate the party who has been adversely affected by the interlocutory order, and so ensure that justice is done. As Gibbs J observed in Air Express (at [311]):

[t]he object of requiring a plaintiff who seeks an interlocutory injunction to enter into an undertaking of this kind is to attempt to ensure that a defendant will receive compensation for any loss which he suffers by reason of the grant of the injunction if it appears in the event that the plaintiff was not entitled to obtain it. The insistence upon the giving of an undertaking is a very important, if not an essential, means of preventing injustice from being done by the court when it makes an order at an interlocutory stage, before the rights of the parties have been finally determined.

33    The effect of an order for damages on the party that has had the benefit of the interlocutory order is not a relevant consideration.

34    Third, I do not accept the applicant’s submission that the undertaking as to damages should not be enforced having regard to the administrative law context in which the stay order was made and the undertaking given. In support of that submission, the applicant referred to paragraphs 24 to 25 of the stay reasons, in which I noted that the considerations as to whether an undertaking as to damages should be ordered differ between administrative cases and private litigation (citing Century Metals and Mining NL v Yeomans (1988) 85 ALR 54 at 58-59 per French J and Botany Bay City Council v Minister of State for Transport & Regional Development (1966) 90 LGERA 81 (Botany Bay) at 86 per Sheppard J). As those authorities indicate, there is “no hard and fast rule” (Botany Bay at 86) in the administrative law context that a party seeking interlocutory relief should be required to give an undertaking as to damages. In exceptional instances, a Court might not consider it appropriate to require an undertaking where an applicant in an administrative matter is entitled to interlocutory relief. However, it is apparent from the cited authorities that the appropriate time to consider whether an undertaking as to damages should be given is at the point that the stay application is considered, rather than the time for its enforcement. No submissions were made on behalf of the applicant as part of its stay application that the usual undertaking as to damages should not be required. The applicant readily proffered an undertaking as to damages in support of its application for a stay. As paragraphs 24 to 27 of the stay reasons make clear, I considered whether it was appropriate for the grant of the stay to be conditioned upon an undertaking as to damages in the circumstances of this case and ultimately decided that it was. In so deciding, I noted that such undertakings had been given in the same context in Galaxy Day Care Pty Ltd v Department of Education and Training [2018] FCA 1549 and Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1640.

35    Fourth, and relatedly, it is clear that the Court retains a discretion whether to enforce an undertaking as to damages. The authorities make clear that a range of factors may be relevant to the exercise of the discretion. In Air Express, Gibbs J observed (at 311-312, emphasis added):

The court has a discretion not to enforce such an undertaking, but unless the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking it would seem just, speaking generally, that a plaintiff who has failed on the merits should recompense the defendant for the damage that he has suffered as the result of the making of the interlocutory order.

36    In Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545, Gibson LJ observed at 1554-1555 (emphasis added):

[t]he form of the [usual] undertaking indicates that the court has a discretion whether to enforce it at all and that discretion is not limited in any way. The power to enforce the undertaking being incidental to the power to grant an injunction (see In re Hailstone; Hopkinson v. Carter (1910) 102 L.T. 877, 880), the discretion will be exercised in accordance with ordinary equitable principles: see, for example, Spry, Equitable Remedies, 4th ed. (1990), pp. 638–645…

The law was stated by Lloyd L.J. (with whom Stocker L.J. and Sir George Waller agreed) in Financiera Avenida v. Shiblaq, 7 November 1990, thus:

“Two questions arise whenever there is an application by a defendant to enforce a cross-undertaking in damages. The first question is whether the undertaking ought to be enforced at all. This depends on the circumstances in which the injunction was obtained, the success or otherwise of the plaintiff at the trial, the subsequent conduct of the defendant and all the other circumstances of the case. It is essentially a question of discretion…”

37    In Yukong Line Ltd v Rendsburg Investment Corp [2001] 2 Lloyd’s Rep 113 (CA) (Yukong), Potter LJ held (at 34, Hale and Thorpe LJJ agreeing):

The question whether the undertaking should be enforced is a separate question from the question whether the injunction should be discharged. The order for an inquiry as to damages is discretionary, such discretion being exercised in accordance with equitable principles, taking into account all the circumstances of the case, but bearing in mind that, since the injunction should not have been obtained, prima facie the plaintiff ought to bear the loss: see Financiera Avenida -v- Shiblaq [1991] The Times 14th January (CA Civil Division). As observed by James LJ in Graham -v- Campbell (1877) 7 Ch. D. 490 at 494, the undertaking ought to be given effect except under ‘special circumstances’. Those special circumstances include the conduct of the injunctee at the time the injunction was obtained or later, see per Lord Diplock in F. Hoffmann -v- La Roche & Co AG -v- Secretary of State [1975] AC 295 at 361.

38    However, in the present case, I am not persuaded that there are any special circumstances (Yukong at 34) that should displace the ordinary presumption that the applicant should compensate the Secretary for damages incurred by reason of the stay order in circumstances where the applicant was not successful in the final determination of its originating application. The applicant was not able to refer to any relevant disentitling conduct on the part of the Secretary. As outlined above, the applicant’s submissions related to the hardship caused to the applicant, and the potential unjust enrichment of the Commonwealth in being reimbursed for the cost of services that it received the benefit of. The question of unjust enrichment is addressed below as part of the assessment of damages. In the absence of any disentitling conduct on the part of the Secretary, I am not satisfied that it would be inequitable to enforce the undertaking.

Should the Commonwealth be compensated for child care subsidy payments made to the applicant during the stay period?

39    The Secretary submitted that, had the stay not been granted, none of the $921,971.28 that the Secretary paid to the applicant between 13 July 2020 and 20 December 2020 in child care subsidies would have been paid to the applicant because the applicant would have ceased to be an approved provider of child care services on and from 28 June 2020. It followed, on the Secretary’s submission, that loss and damage of that amount was incurred by reason of the stay.

40    The Secretary’s submission appears to assume that, had the stay not been granted, the Commonwealth would not have been required to pay child care subsidies in respect of the children that, until 28 June 2020, had been attending Billan Family Day Care. However, if the stay had not been granted and the applicant ceased to be an approved provider of child care services, there must be a realistic possibility that children who had been attending Billan Family Day Care until that time would begin attending another approved child care service. To the extent that occurred, the Commonwealth would have been required to pay the same amount of child care subsidies in respect of those children. The Commonwealth bears an obligation to provide subsidised child care to eligible recipients irrespective of whether Billan Family Day Care is authorised to deliver child care services. It follows, in my view, that to the extent that children were likely to transfer from Billan Family Day Care to another approved child care service, no loss would have been incurred by the Commonwealth by reason of the stay order. It would have been in the same position in terms of payments whether the stay order was granted or not.

41    As the Secretary bears the burden of proof in establishing loss and damage, the Secretary bears the burden of establishing that all or some of the children that were attending Billan Family Day Care prior to 28 June 2020 would not have transferred to another approved child care service if Billan ceased to provide services. The fact that children attended Billan Family Day Care during the stay period supports a conclusion that they required child care during that period. In the absence of evidence that there were practical or legal impediments to the children transferring to another approved child care service during the stay period, I would readily infer that the children would have transferred to another provider. The Secretary did not adduce evidence, or advance submissions, showing that there were any such practical or legal impediments.

42    As referred to above, the Secretary did adduce evidence analysing whether the children that had attended Billan Family Day Care prior to 21 December 2020 (when Billan ceased being an approved provider) had transferred to another approved provider as at 28 February 2021. The evidence showed that, of the 286 children recorded as receiving approved child care services from the applicant after 13 July 2020, 80 of those children did not receive child care from another approved child care provider as at 28 February 2021. The Secretary submitted that the Court should infer that, had the stay order not been granted and the applicant’s business closed, about 80 children would not have transferred to another approved child care service provider.

43    I consider that the foregoing evidence has limited probative value on the assessment of loss during the stay period, primarily because the evidence concerns a different time period. There are a number of reasons why a child may have required care during the stay period but might not have required care as at February 2021. First, by the note submitted by counsel for the Secretary after the hearing with the agreement of counsel for the applicant, the parties agreed that children aged 14 and above are generally not eligible for child care subsidies and children who are attending secondary school, age 12 and 13, are generally only eligible for child care subsidies in prescribed circumstances, namely where their parents have made a statutory declaration that their child cannot be left at home alone and that there is no adult able to provide suitable care. It follows that a child may have required care during the stay period but might not have required care as at February 2021 by reason of reaching secondary school age. Second, the COVID-19 pandemic may have affected the employment or income position of one or more of a child’s parents, and thereby affected the need for, or affordability of, child care services.

44    In my view, the Secretary has not discharged the burden of proving that all or some of the children that were attending Billan Family Day Care prior to 28 June 2020 would not have transferred to another approved child care service if Billan ceased to provide services from that date. I am therefore unable to conclude, on the balance of probabilities, that the Commonwealth paid child care subsidies to the applicant during the stay period that would not have been paid but for the stay order. Accordingly, the Secretary has not established that, by reason of the stay order, the Commonwealth incurred loss or damage in the amount of the child care subsidies paid to the applicant during the stay period (being $921,971.28).

Should the Commonwealth be compensated for COVID-19 related payments made to the applicant during the stay period?

45    Like the child care subsidies, the COVID-19 related payments made to the applicant during the stay period (totalling $354,682.60) would not have been paid to the applicant had the stay not been granted because the applicant would have ceased to be an approved provider of child care services on and from 28 June 2020. The question then arises whether, had the stay not been granted, the Commonwealth would nevertheless have paid the same or an equivalent amount of COVID-19 related payments to other approved child care providers to whom children may have transferred from Billan Family Day Care when the applicant ceased to be an approved provider.

46    The evidence shows that the COVID-19 related payments made to the applicant during the stay period were of a different character to the child care subsidies and were calculated in a different manner. Each of the weekly Business Continuity Payments and the weekly Transition Payments were calculated as a proportion of the approved provider’s deemed average weekly fee revenue based on the fortnight starting 17 February 2020, rather than the hours of child care provided to children during the period of the weekly payments. Had the stay not been granted, the COVID-19 related payments paid to Billan Family Day Care would not have been made. Nor would an equivalent amount have been paid to another approved provider to whom children may have transferred. That is because the equivalent payments made to other providers were calculated on the same basis, being deemed average weekly fee revenue based on the fortnight starting 17 February 2020. Thus, the COVID-19 related payments made by the Commonwealth to other providers would have been unaffected by the closure of Billan Family Day Care and any resulting transfer of children, because the payments were calculated on the basis of fee revenue earned prior to the closure of Billan Family Day Care.

47    The applicant advanced the submission that, if an approved provider of child care services commenced operation during the stay period (and during the period in which the COVID-19 related payments were made), the payments would have been calculated based on the provider’s fee revenue upon commencement of the child care service. The applicant submitted that, if the stay had not been granted and the applicant ceased to be an approved provider of child care services, there was a realistic possibility that children who had been attending Billan Family Day Care until that time would begin attending another approved child care service that commenced operation during the stay period. In those circumstances, the Commonwealth would have made equivalent COVID-19 related payments in respect of children who transferred from Billan to such a provider.

48    I do not accept the foregoing submission of the applicant. In my view, the submission is based on the expectation of an unrealistic confluence of events. The scenario postulated by the applicant is that, first, an approved provider of child care services commenced operation in the period after 28 June 2020 (and before the end of the COVID-19 related payments on 27 September 2020); second, children who had been receiving services from Billan Family Day Care transferred to the new provider; and third, the children transferred at a time that affected the average fee revenue of the new provider on which the calculation of the COVID-19 related payments would be based. No evidence was adduced by the applicant to establish that any new providers of child care services were established in the period from 28 June 2020 to 27 September 2020, or were established in a location that made it feasible that children attending Billan Family Day Care might begin attending the new child care service. I consider that the hypothetical scenario postulated by the applicant is a remote possibility and not one that the Secretary is obliged to disprove.

49    Unlike the child care subsidies, I find that the Commonwealth would not have incurred, as an outgoing, the COVID-19 related payments made to the applicant during the stay period if the stay order had not been made. Those payments totalled $354,682.60 during the period 28 June 2020 to 27 September 2020, consisting of $107,218.07 in Business Continuity Payments and $247,464.53 in Transition Payments. The financial outgoing therefore flowed directly from the grant of the stay. In my view, loss of the kind sustained by the Commonwealth was reasonably foreseeable by the applicant having regard to the nature of the payments and their method of calculation.

Conclusion

50    In conclusion, I find that the applicant is liable to pay damages to the Commonwealth pursuant to the undertaking as to damages given by the applicant on 25 June 2020. Those damages should be limited to the COVID-19 related payments totalling $354,682.60 made to the applicant during the stay period, being payments that I have found the Commonwealth would not have made but for the granting of the stay order.

51    Although the Commonwealth was not successful on the entirety of its claim for damages, it enjoyed substantial success. The applicant opposed the making of any order as to damages. In my view, the Commonwealth should also receive the costs of its application. I will make an order to that effect. However, I will also give the applicant liberty to apply within 14 days to seek a variation of the costs order.

Associate:

Dated:    9 December 2021