Al-Huda Pty Ltd and Secretary, Department of Education and Training - [2020] AATA 2002

Al-Huda Pty Ltd and Secretary, Department of Education and Training [2020] AATA 2002 (29 June 2020)
Division:GENERAL DIVISION
File Number(s): 2018/6379
Re:Al-Huda Pty Ltd
APPLICANT

AndSecretary, Department of Education and Training
RESPONDENT

DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:29 June 2020
Place:Sydney

The reviewable decision is affirmed.
............[sgd]............................................................
Mrs J C Kelly, Senior Member
CATCHWORDS
CHILDCARE – education and care services – child care benefit – child care subsidy – non-compliance with the family assistance law – continued approval of a childcare service – whether the Applicant has not complied, or is not complying, with a condition for continued approval as a provider of child care services under the family assistance law – whether a sanction should be imposed– which sanction should be imposed – reviewable decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – ss 37
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – as it has been since 2 July 2018 – ss 3, 67GB, 194A ,194B, 194E, 195H(1), 195H(2), 201A, 204B, 204F(1); pt 8
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – as it was prior to 2 July 2018 – ss 3, 50, 50Z, 65EAAA, 66, 194, 195A(a), 196(1), 196(2), 196(3), 200(1)(e), 205(1)(b), 219AB, 219AC, 219B, 219EA, 219N, 219N(4), 219N(7), 219Q(1), 219QB, 219QC, 219QE, 71CA, 71CB; pt 8, 8A
A New Tax System (Family Assistance and Related Measures) Act 2000 (Cth) – sch 5, 6
Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (Cth) – ss 5, 8, 8(2), 9(1), 9(2)(a), 9(5)(a)
Child Care Benefit (Children in respect of whom no-one is eligible) Amendment Determination 2017 (Cth)
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (Cth) – ss 7, 10A, 10AB, 11, 16; pt 2, 3
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Cth)
Child Care Benefit (Sessions of Care) Determination 2016 (Cth) – ss 11(1)(b)(i)
Child Care Subsidy Minister’s Rules 2017 (Cth) – ss 4, 46, 52, 55, 74, 75
Crimes Act 1914 (Cth) – pt VIIC
Education and Care Services National Law Act 2010 (NSW)
Education and Care Services National Law Regulations 2019 (NSW) – reg 124, 158, 159
Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth) – ss 2(1), item 2; sch 4, item 10

CASES
Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706
Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 1463
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
29 June 2020
THE REVIEWABLE DECISION

The question to be decided is whether the Applicant’s (Al Huda Pty Ltd) approval as a provider of child care services (the approval) should be cancelled or some other sanction or no sanction should be imposed. The approval was granted on 14 July 2014.
On 21 September 2018 a delegate of the Secretary, Department of Education and Training decided to cancel the approval with effect on 8 October 2018. The Applicant applied for internal review of that decision. An authorised review officer (ARO) made a decision dated 1 November 2018 affirming the cancellation decision. The Applicant has applied to the Tribunal for review of that decision (the reviewable decision).
A stay of the reviewable decision has been in effect since 5 October 2018, as a consequence of orders made by the Federal Court and the Tribunal.
THE ISSUES
The reviewable decision was made pursuant to section 195H(1)(b) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), as it has been since 2 July 2018 (the Current Administration Act). That Act as it was prior to amendment on 2 July 2018 is referred to as the Old Administration Act. The issues to be determined are factual. They are:
(a)whether the Tribunal is satisfied that the Applicant has not complied, or is not complying, with a condition for continued approval as a provider of child care services under the family assistance law;
(b)If so, whether a sanction should be imposed on the Applicant; and
(c)If so, which sanction should be imposed.
THE LEGISLATIVE FRAMEWORK
There is no dispute about the law in this case.
“Family assistance law” means any one or more of the (in force) Administration Act, A New Tax System (Family Assistance) Act 1999 (Cth), any instrument (including regulations) made under those Acts, and Schedules 5 and 6 to the A New Tax System (Family Assistance and Related Measures) Act2000 (Cth).[1]
[1] Section 3 of the Old and Current Administration Acts.
Family assistance law establishes a framework which entitles eligible individuals to Child Care Subsidy (CCS), formerly known as child care benefit (CCB) and child care rebate (CCR). These were contributions to assist eligible individuals (for example, parents) with their child care fees and were only payable in relation to child care services if the provider of those services is a provider who has been approved by the Respondent for the purpose of the family assistance law. The 2 July 2018 amendment repealed the approval process in the Old Administration Act and substituted a new Part 8.[2] The new CCS operates in the same manner.
[2] Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth) (the Amendment Act).
Payments of CCB and CCR (and now, CCS) can be made directly to eligible individuals or to a child care provider, who then passes the subsidy on to the parents as a fee reduction. However, as noted above, a provider cannot receive such subsidies unless it is approved for the purposes of the family assistance law. Many eligible individuals choose the fee reduction, such that the relevant approved provider becomes a conduit by receiving a subsidy that, in fact, reflects the eligible individual's entitlement.
The reviewable decision was made under the Current Administration Act. References to provisions relating to the reviewable decision itself are references to provisions as they stood after 2 July 2018. Sections 74 and 75 of the Child Care Subsidy Minister’s Rules 2017 (the Minister’s Rules) address notices issued, and sanctions in respect of breaches, prior to, 2 July 2018.[3]
[3] See definition of commencement day in section 4 of the Child Care Subsidy Minister’s Rules 2017 and the Amendment Act, section 2(1), item 2 in the Table.
The law relevant to the conditions for continued approval and other provider obligations in the Old Administration Act was saved under item 10 of schedule 4 to the Amendment Act. Consequently, references in documents to the Applicant’s non-compliance with the “Administration Act” are to the provisions as they stood prior to 2 July 2018 as saved by the Amendment Act.
On 2 July 2018, the Child Care Subsidy (CCS) and Additional Child Care Subsidy (ACCS) replaced the child care fee assistance payments Child Care Benefit (CCB) and Child Care Rebate (CCR). Both operated/operate in the same way. The financial contributions assist eligible individuals (such as parents) with their child care fees and are only payable in respect of sessions of care provided by an approved child care provider.
Payments of both types of contributions can be directed to eligible individuals or to a child care provider who then passes on the subsidy to eligible individuals by way of fee reduction. In this case, the Applicant, as the provider, received the subsidies which reflect the eligible individual’s entitlement. The provider must pass on the subsidy to the eligible individual as a reduction of their fees within 14 days of being notified of the amount calculated.[4]
[4] Sections 219B and 219EA of the Old Administration Act and section 201A of the Current Administration Act.
Child care fee assistance is calculated on the eligible individual’s circumstances, including personal income and activity-based parameters such as paid employment. The Respondent does the calculation.
The family assistance law, as it relates to child care assistance, is the “inalienable” entitlement of eligible individuals.[5] Such assistance is part of Australia’s social welfare framework. The family assistance law does not establish an entitlement to subsidies or business revenue for child care service providers. To the extent that the family assistance law relates to child care service providers, it is only for the purpose of establishing the approval framework pursuant to which eligible individuals can direct child care subsidies, which relate to actual child care provided to their children, to particular approved providers.
[5] Section 66 of the Old Administration Act; section 67GB of the Current Administration Act.
The central requirement of the approval framework is that child care service providers must report fully and accurately to the Respondent to enable the Respondent to correctly calculate the CCS payable to eligible individuals and to ensure that no payments of public funds are directed to approved providers unless they are entitled to receive them, that is, they have delivered the child care service.
Child care service providers must fully pass on child care fee assistance to eligible individuals by way of fee reduction. If that cannot occur, for example, if care was not provided, the provider must immediately remit the child care fee assistance to the Respondent.[6]
[6] Sections 219QB and 219QE of the Old Administration Act.
A person, including a corporation, that operates a child care service can apply for approval as an “approved child care service” for the purposes of the family assistance law.[7]
[7] Section 194 of the Old Administration Act and sections 194A and 194B of the Current Administration Act. The language has changed from “service” to “provider”.
Subsection 195A(a) of the Old Administration Act provides that an obligation imposed on a child care service is taken to be imposed on the person operating the service, that is, the Applicant, acting through its officers, staff and agents, including its educators. The Applicant is not excused from its responsibilities and obligations in relation to non-compliances by attributing them to the educators or eligible persons.
In Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706, the Tribunal observed at [26]:
Finally, I see no merit in Moonlight blaming the educators involved: Moonlight had a clear obligation imposed on it by Commonwealth law and it is not in point to explain away failure to meet that obligation by referring to the errors of others. This shows up in my view as a failure of governance which is central to the admitted breaches of the Applicant.
In Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 1463, the Tribunal adopted a similar approach in relation to excuses for non-compliance proffered by the Applicant.[8]
[8] At [193] - [194].
An approved provider is obliged to continue to comply with a number of “conditions of continued approval” in order to maintain approval.
The following are relevant categories of conditions for continued approval under the family assistance law as outlined in subsection 196(1), (2) and (3) respectively, of the Old Administration Act:
(i)Satisfying any applicable eligibility rules made under subsection 205(1)(b). The relevant instrument was the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (the Eligibility Rules);[9]
(ii)Not contravening an obligation imposed on the service by the family assistance law (whether or not such a contravention constitutes an offence or is of a civil penalty provision), which includes Part 8 (Approval of Child Care Services and Registered Carers) and Part 8A (Obligations) of the Old Administration Act; and
(iii)Compliance with other Commonwealth, State and Territory child care laws, including the Education and Care Services National Law Act 2010 (NSW) (the National Law) and Education and Care Services National Law Regulations 2019 (NSW) (the National Regulations), as they apply in New South Wales.
[9] The Eligibility Rules were revoked from 2 July 2018 and had replaced the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 from 1 October 2017.
Subsection 195H(1) of the Current Administration Act provides that the Respondent may impose one or more sanctions on an approved provider if satisfied that the provider has not complied, or is not complying, with conditions for continued approval. Sanctions include cancellation.[10] In exercising a power under subsection 195H(1), the Respondent must have regard to any matters prescribed by the Minister’s rules that must be taken into account.[11]
[10] Section 195H(1)(b) of the Current Administration Act.
[11] Section 195H(2) of the Current Administration Act.
Cancellation or other sanctions do not prevent the provider from operating. Cancellation of approval under the family assistance law has the effect that CCS is not payable to eligible parents/guardians for any child care service provided by that provider. A provider can continue to operate if it holds approval as an “education and care service” from, relevantly, the New South Wales regulator, under the National Law, which is a separate approval framework.
BACKGROUND FACTS
Following is a table based on that set out in the Respondent’s Amended Statement of Facts, Issues and Contentions dated 17 May 2019 (RASOFIC). It includes events relevant to deciding the issues in this case. References to “Annexures” are to Annexures to the RASOFIC. References beginning with “T” refer to documents provided by the Respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth). Ms Fatme Tlais is the secretary, and one of two directors and shareholders of the Applicant. She is responsible for the running of the business and providing evidence for the Applicant in this case.

Date

  Event

14 July 2014

The Applicant was granted approval as a childcare provider under the family assistance law.

16 April 2015

Following a review of the Applicant’s compliance, the Respondent issued a notice of non-compliance for breaches of conditions for continued approval including that the Applicant reported:

(a)     attendances or absences of children before care had started to be provided by the Applicant for a number of children;

(b)     attendances or absences of children after care had ceased to be provided by the Applicant for a number of children;

(c)     attendances or absences for days where care was not provided by the Applicant for a number of children;

(d)     full day sessions for a number of children on days that the children attended school.(T5 to T9)

6 May 2015

The Applicant responded to the alleged non-compliances.(T10)

13 October 2015

The Respondent sent a form letter to the Applicant about child swapping measures that came into effect on 12 October 2015. (T11)

6 October 2016

The Respondent sent a form letter to the Applicant about a number of payment integrity measures, including stricter rules about reporting child care that is purported to have taken place in a child’s own home.(T23)

2 March 2017

The Respondent emailed the Applicant about compliance measures, including about reporting child care that is purported to have been provided to older children who are extremely unlikely to attend child care.(T25)

20 April 2018

The Respondent issued to the Applicant a Notice of Intention to Impose Sanction (NOIS) under section 200(1)(e) of the Old Administration Act.(T12)

4 May 2018

The Respondent issued a notification to the Applicant warning that the Respondent was monitoring inaccurate attendance reporting closely and would consider taking compliance action in respect of providers who provided inaccurate reports.(Annexure C to the RASOFIC)

15 May 2018

The Applicant made submissions in response to the NOIS (Submission 1).(T13)

2 July 2018

CCS introduced.

1 August 2018

The Respondent issued to the Applicant a Notice of Further Contraventions of the Family Assistance Law.(T14)

15 and 16 August 2018

The Applicant made submissions in response to the 1 August notice. (Submission 2)

21 September 2018

Delegate of the Respondent decides to cancel the Applicant’s approval pursuant to section 195H(1)(b) of the Current Administration Act, with effect from 8 October 2018.(T16)

24 September 2018

Ms Tlais contacted Mr Alameddine, a solicitor.[12]

26 September 2018

The Applicant requested an internal review of the cancellation decision.(T17)

3 October 2018

The Respondent acknowledged request for internal review and invited the Applicant to provide new or supplementary information for the internal review officer’s consideration.

12 October 2018

The Applicant responded to the department’s 3 October invitation to provide information which included 23 attachments. (Submission 3)

1 November 2018

An Authorised Review Officer (ARO) affirmed the cancellation decision.(T2)

2 November 2018

The Applicant applied for review of the ARO’s decision and a stay.

23 November 2018

The Applicant’s submissions in support of the stay application.

30 November and 3 December 2018

Hearing of stay application.

4 December 2018

Stay granted with conditions including that within 7 days of receipt of the decision, the Applicant repay monies it owes in respect of the breaches it acknowledges, as agreed with Respondent.

9 December 2018

The Applicant pays sums of $10,450.68 and $177.57.

12 December 2018

The Applicant pays the sum of $4,174.88, totalling $14,803.13. The Respondent calculated monies owing for the acknowledged breaches totalled $43,675.25. The disputed sum was $28,917.12.

14 December 2018

The Tribunal found that the conditions of the stay order had not been met and the stay no longer had effect.

20 December 2018

After the Applicant commenced proceedings in the Federal Court challenging that decision, the Tribunal granted a stay, by consent, subject to the condition that within 24 hours of the time that the order was notified to the Applicant, the Applicant is to pay to the Respondent the sum of $28,917.12, on account only and without prejudice to the parties' positions as to whether such amount is

otherwise owing.

1 February 2019

Affidavit of Ms Tlais and Applicant’s SOFIC filed.

12 February 2019

The Respondent emailed the Applicant providing an opportunity to provided additional information about its non-compliance.(Annexure D)

13 February 2019

The Respondent emailed the Applicant to invite comments on additional non-compliance that had been identified.(Annexure E)[13]

22 February 2019

The Applicant responded to the emails of 12 and 13 February 2019.(Annexure F)

1 March 2019

Respondent’s SOFIC filed.

17 May 2019

Respondent’s Amended SOFIC (RASOFIC) filed.

31 May 2019

Applicant files and serves an affidavit and annexures from 4:45 pm to 4:51pm.

[12] Affidavit of Ms Tlais dated 1 February 2019 at [64].
[13] Two attachments were not included because the Respondent did not rely on them.
PROCEDURAL ISSUES

Ms Tlais’ affidavit filed and served late on Friday 31 May 2019 was nine pages long. There were 253 pages of annexures. In the one business day between receiving the document and the hearing on 4 June, the Respondent was unable to check all the data provided. The Respondent said, and I accept, that it was disadvantaged. It was prepared to proceed in the public interest, reserving its right to provide further written submissions after the hearing if it considered it necessary in order to be given procedural fairness, or if the Tribunal required them. Neither eventuated. The affidavit was not a “short updating affidavit” as foreshadowed to the Respondent by the Applicant’s solicitors on 30 May 2019.

Ms Tlais’ claim in the affidavit that she was responding “partly” to the Respondent’s Amended SOFIC of 17 May 2019 was disingenuous. The RASOFIC deleted a specific allegation and clarified a legislative reference. The Respondent’s case was as set out in its SOFIC dated 1 March 2019 except for the deleted alleged contravention, almost three months before the affidavit was filed.
In the time the Respondent had available it checked and contradicted two claims made by Ms Tlais in the affidavit which it set out in an email it sent at 4:53 pm on 3 June 2019. Some of Ms Tlais’ other evidence in that affidavit was addressed during cross-examination.
It was unnecessary to consider the evidence in Ms Tlais’ 31 May 2019 affidavit that was not directly addressed because having considered the other voluminous evidence that had been contested, as set out below, I have found that Ms Tlais’ evidence and the Applicant’s records are unreliable.
THE APPLICANT’S BUSINESS
The following is based on Ms Tlais evidence in her affidavit of 1 February 2019 about the Applicant’s business.[14] The Applicant provides family day care services to children in a home environment. Typically, a family day care educator (educator) will provide care for the children in the educator’s home before school, drop them to school, pick them up and provide after-school care. Educators may also provide long day care for pre-school age children or younger. The Applicant operates in the south-western Sydney suburb of Auburn. The majority of families to whom it caters are first and second-generation immigrants from a low socio-economic background. When the Applicant received the NOIS, it employed about 54 educators and provided care for about 330 children. At the date of the affidavit, it employed 26 educators as contractors and had 166 children enrolled in its care. It employed five permanent staff members.
[14] At [14] - [18].
I accept the Respondent’s evidence that the Applicant has received a total of $14,767,795.70 of taxpayers’ money for the provision of child care for the period from the time of its approval in 2014 to June 2019.[15]
[15] Email from the Respondent’s legal representative to the Tribunal dated 3 June 2019.
Child Care Management System and the Applicant’s input into it
Ms Tlais stated the following in her affidavit sworn on 1 February 2019. The Child Care Management System (CCMS) was the Australian Government’s national online computer system used to administer, relevantly, CCB and CCR before 2 July 2018. Approved child care providers were required to operate under the system. They used software provided by a third party which was registered with CCMS to record child enrolment and attendance information and to upload that information to CCMS via the internet. The Applicant used Harmony software for that purpose. The Department of Education and Training used the uploaded information to calculate CCB for eligible families which was paid to the child care provider.
On 2 July 2018 the CCMS was replaced by the Child Care Subsidy System (CCSS). Reporting actual attendance times for children was mandatory from 14 January 2019.
The Applicant saved the educator’s booked days onto the “timesheet’ page of its software. A timesheet is for a fortnight of care. The duty of the authorised person (the director or nominated supervisor) who is submitting the attendance records to CCMS is to amend the saved timesheet according to the time sheet provided by the educator before submitting them.
Issue 1: Non-compliance with the family assistance law
The Applicant has conceded some of the non-compliances with the family assistance law that the Respondent has alleged have occurred and provided explanations in its correspondence with the Respondent and in its oral and written representations to the Tribunal. It has disputed others. It has amended policies and procedures and proposes to amend others.
Some controversy arose about concessions the Applicant made during the stay hearing on 30 November 2018 which it later withdrew. Ms Tlais attributed them to counsel who appeared on that occasion. They were summarised in a table the Applicant provided and discussed during the stay hearing.[16] It was a condition of the stay order made on 4 December 2018 that the Applicant “repay monies it owes in respect of the breaches it acknowledges, as agreed with Respondent”. Following a dispute between the Applicant and Respondent about the amount to be paid, on 14 December 2018 the Tribunal found the condition of the stay order had not been met and the stay was no longer in effect. The Applicant applied to the Federal Court, and on 20 December 2018 consent orders were made by the Tribunal which required the Applicant to “pay to the Respondent the sum of $28,917.12 on account only, without prejudice to the parties’ positions”. I infer that the Applicant changed its position because payment of monies was involved, and the Applicant reconsidered the concessions it had made.
[16] The table is Annexure G and the transcript is Annexure H to the Respondent’s SOFIC dated 1 March 2019.
The non-compliances in issue fall into various categories. They are discussed below and divided into two broad categories:
(a)conditions relating to accuracy of attendance reports;
(b)conditions relating to the Applicant’s suitability to operate a child care service.
a) Conditions relating to accuracy of attendance reports
The Law
Subsection 196(2) of the Old Administration Act provides that a condition for continued approval is that the Applicant not contravene an obligation imposed by the family assistance law, regardless of whether a contravention constitutes an offence or is a civil penalty provision. Relevantly, this include sections 219B and 219EA (obligations to pass on subsidy as a fee reduction), section 219AB (enrolment notifications), section 219N (attendance reporting) and sections 219QB and 219QE (remit overpayments) of the Old Administration Act.
Sections 219N, 219AB, 219QB and 219QE of the Old Administration Act are offence provisions, which reflects the seriousness of the breach of each of those sections. Each contravention by the Applicant is also potentially the commission of an offence.
Section 219N of the Old Administration Act creates a positive obligation on the Applicant to give the Respondent a "report" for each week in which the Applicant provides child care for a child (attendance report). The report must include attendance details, as well as any information required to determine:
(a)whether a fee reduction is applicable (subsection 219N(4)(a)(i));
(b)entitlement to CCB (subsection 219N(4)(a)(ii));
(c)amounts of CCR that are payable (subsection 219N(4)(aa)); and
(d)any other information required by the Respondent (subsection 219N(4)(b)).
I accept the Respondent’s contention, which was not disputed by the Applicant, that the provision of an accurate attendance report is essential to enable the Respondent to correctly make a calculation in respect of CCB for a week under section 50Z of the Old Administration Act. An amount of CCB calculated under section 50Z is then paid to an approved child care service to pass on as fee reductions under subsection 219Q(1) of the Old Administration Act. Sections 65EAAA and 219QC of the Old Administration Act are the equivalent provisions for weekly payments of CCR.
I accept the following contention put by the Respondent and which was not disputed by the Applicant. The CCS payment system (and previously, the CCR and CCB system) would be unworkable and incapable of administration, and the maintenance of public confidence would be diminished, if section 219N of the Old Administration Act were interpreted to allow inaccurate reports as long as such reports are eventually corrected once non-compliance is detected by the regulator and compliance action is taken or threatened by the Respondent. A "report", by nature, is a reflection of facts which need to be based in truth. If inaccurate reports are made, payments of CCS, CCB and CCR, which are public funds, will be made without there being any eligible individual to whom the Applicant can lawfully pass on those payments.
Subsection 219N(7) of the Old Administration Act provides child care service providers with the ability to substitute or withdraw reports. In the context of the legislative scheme, this power is only to be relied on to correct genuine and anomalous oversights, rather than to remediate systemic, fraudulent, or other blatant and ongoing inaccuracy once non-compliance is detected. The failure to comply with section 219N of the Old Administration Act is an offence which emphasises the importance of reporting being completely accurate.
Subsection 196(3) of the Old Administration Act deems requirements imposed by other child care laws, including the National Law and National Regulations as they apply in New South Wales, to be conditions for approval that are enforceable through the imposition of a sanction.
Relevantly for the purposes of subsection 196(3) of the Old Administration Act, National regulations 158 and 159 require attendance records to be made and kept by the approved provider and family day service educators that accurately record the name of children attending as well as arrival and departure times. They state:
158 Children's attendance record to be kept by approved provider
(1)The approved provider of an education and care service must ensure that a record of attendance is kept for the service that—
(a)records the full name of each child attending the service; and
(b)records the date and time each child arrives and departs; and
(c)is signed by one of the following persons at the time that the child arrives and departs—
(i)    the person who delivers the child to the education and care service premises or collects the child from the education and care service premises;
(ii)   a nominated supervisor or an educator.
(2)...
159 Children's attendance record to be kept by family day care educator
A family day care educator must keep a record of attendance that—
(a)records the full name of each child being educated and cared for at the family day care residence or approved family day care venue; and
(b)records the date and time each child arrives and departs; and
(c)is signed by one of the following persons at the time that the child arrives and departs--
(i)    the person who delivers the child to the family day care residence or venue or collects the child from the family day care residence or venue;
(ii)   if the signature of the person who delivers the child cannot reasonably be obtained- the family day care educator.
The alleged non-compliances
Educator overseas – 1 January 2016 to 18 April 2018 – section 219N
The ARO identified 71 sessions of care that the Applicant reported when no care was provided because the educator was overseas. The Applicant conceded these non-compliances at the stay hearing but alleged some were due to educator fraud.
In her affidavit of 1 February 2019, Ms Tlais conceded that 54 sessions were reported as administrative errors, 2 were fraudulently reported by the educators, and 15 sessions were disputed.[17] Ms Tlais explained how the administrative errors occurred and the measures to be introduced to avoid those mistakes.[18] She referred to a section of the 326-page “Al-Huda Daycare and Education Policies and Procedures Manual 2019” at Tab 8 of her affidavit. She talked about measures being introduced during her oral evidence.
[17] At [110] - [111].
[18] At [112] - [115], [118] - [124].
The Respondent conceded three sessions by one educator so that the number of sessions in issue was 68. I accept its explanation that neither the ARO nor the Respondent relies on sessions relating to two other educators because the ARO acknowledged that they may have happened and did not include them.[19] The sessions in issue relate to the educator Rosa Kowaider.
[19] At [7.20] of the RASOFIC.
Ms Tlais and her counsel emphasised that the legislation allows the subsidy to be paid for 42 sessions per year when a child is absent.
Ms Tlais did not address Ms Kowaider’s circumstances in her 31 May 2019 affidavit. In her 1 February 2019 affidavit, Ms Tlais said the following. The sessions reported by Rosa Kowaider were submitted as absences. The Applicant did not claim that the children did attend for care. Ms Tlais included a timesheet for one child showing that the child was sick on 30 September 2016 and the booked time was from 9 am to 7 pm.[20] Ms Tlais said that the educator did not claim that she was looking after the “kids” even though her flight was outside her booked hours.
[20] At Tab 5A.
The Respondent’s position before the hearing was that care could not have been provided by the educator because immigration movement records show that she passed through immigration at 7:04 pm.[21] It explained that the eligible individual can claim an absence if the child cannot attend care, but an educator cannot claim absences where they are unable to provide care.
[21] RASOFIC at [7.22], T2/15 and T12/164.
When it was put to Ms Tlais at the hearing that Rosa Kowaider could not have been caring for a child until 7 pm, she said that the claim was valid but should be reduced to 5 pm.
The Respondent did not press this non-compliance but put the following argument. Ms Tlais’ concession during her oral evidence was relevant to the consideration of the Applicant’s management and how it responds to particular allegations. It was Ms Tlais’ third position in respect of Rosa Kowaider: she had conceded the non-compliance, disputed the non-compliance entirely, and then made the concession. When faced with clear-cut evidence that someone was overseas, the Applicant conceded that there was an administrative error, or educator or parent fraud. When the non-compliance may not have occurred, the Applicant denied the non-compliance. In every case where there was a flight outside business hours, the Applicant claimed that care was provided on that day. The Respondent does not have the resources to look into the matter further.
I accept the Respondent’s description of the Applicant’s approach to the non-compliances alleged and that the Respondent does not have the resources to pursue such matters further and is unable to check if an educator or a child holidays in Australia.
The timesheet provided raises concerns about the reliability of the Applicant’s records. It shows that on 30 September 2016 both the parent and the educator signed declarations at the bottom of the timesheet stating that “this is a true and accurate record of the care provided for week 1 and 2”. First, if no care was provided on 30 September 2016, how did the parent sign it on that day, and secondly, both the educator and the parent have endorsed incorrect hours of care for 30 September 2016, if Ms Tlais’ concession is accepted. I conclude that Ms Tlais had no evidential basis for making her concession. She does not know whether Ms Kowaider was available to provide care on that day. The Applicant’s records provided to the Respondent and the Tribunal do not provide the answer.
As discussed below in relation to child care in the child’s own home, Ms Tlais changed her evidence about to whom the eligible person paid the difference between the subsidy and the total cost charged. In her 1 February 2019 affidavit she said the eligible person paid that sum to the provider. After the Respondent requested evidence showing that the eligible person had incurred a fee liability, Ms Tlais responded that the eligible person paid the educator and that the Applicant was not obliged to keep a record of that payment.
Ms Tlais emphasised that the Applicant’s clients were from a low socio-economic group. It is unlikely that the eligible person would have paid the difference if the educator was not caring for the child. If the Applicant had required the eligible person to pay the difference and payment was not received, the Applicant would have been alerted that care was not being provided. It would have records of invoices and receipts for such payments. If those eligible persons genuinely required the child care because they were working or for some other reason, they would have been greatly inconvenienced if it was not being provided. It is surprising that there are no records of complaints to the Applicant, which would have alerted it to the problem.
It seems to me that the simple measure of requiring the eligible person to pay the Applicant was likely to have alerted it to educator fraud. It was not a measure Ms Tlais considered.
The other reason for Ms Tlais gave for the sessions of care she conceded was administrative errors. She said that they occurred because the educator’s booked days for a child were saved into the Harmony timesheet page and amended if there are any differences with the educator’s time sheet for the two-week period. The errors occurred if the person submitting the time sheet pressed “ready for CCMS (Both Weeks)” before the timesheet had been amended.
This explanation is unsatisfactory. Why did the person making the amendments not realise immediately that the timesheet information had been submitted in error and take remedial action?
The Applicant’s “explanations” are possible but not based on persuasive evidence.
Child was overseas – 1 January 2016 to 18 April 2018 – section 219N
The ARO identified 388 sessions of care submitted for 33 children when they were overseas.
At the stay hearing, the Applicant conceded those non-compliances but alleged some were due to educator fraud.
In her 1 February 2019 affidavit, Ms Tlais conceded that 89 sessions resulted from administrative error and 299 were caused by educators submitting fraudulent timesheets. She repeated her explanation of how the administrative errors occurred.[22] She described steps to be taken to address those issues.[23] She said that any session of care that was wrongly reported was cancelled and/or money refunded.[24]
[22] Ms Tlais’ 1 February 2019 affidavit.
[23] A [118] - [124].
[24] At [122].
The Respondent says, and I accept, that the Applicant has effectively conceded that it had no, or limited, governance structures in place to verify the accuracy of the timesheets its educators provided and therefore to submit accurate reports as required by the family assistance law.[25] At the hearing, the Respondent added that the Applicant’s claims of fraud and administrative error are mere assertions without evidence to support them. The Applicant argued that the signed time sheets was evidence of fraud.
[25] Respondent’s SOFIC and RASOFIC at [7.25].
Having considered all the categories of non-compliance in issue, and for the reasons given in relation to particular non-compliances, I have found that the Applicant’s records are not reliable and Ms Tlais’ evidence is not reliable. I do not accept that the timesheets establish fraud by the educator. I do not accept the explanation for administrative error. I find that the Applicant had no or limited governance structures in place to verify the accuracy of timesheets its educators provided and therefore to submit accurate reports as required by the family assistance law. As stated above, the simple measure of requiring the eligible person to pay the difference between the subsidy and the cost of a session of child care to the Applicant rather than to the educator is an obvious way of improving the Applicant’s governance, but not one that has occurred to the Applicant.
Reporting 365 sessions of care where no-one was eligible to receive CCB or CCR – section 219N - child swapping
During the period 1 January 2016 to 18 April 2018, the ARO identified 365 sessions of care for children whose parents were educators and not eligible to receive CCB or CCR payments (child swapping). Child swapping means that a family day care educator or their partner, receives child care fee assistance from the Respondent for a session of care provided to their own child on the same day that the educator provided family day care for another child. The family assistance law provides that an individual is not eligible to receive CCB or CCR payments where they have engaged in ‘child swapping’ unless a specified circumstance applied.[26]
[26] Subsection 8(2) of the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015.

The Applicant conceded those non-compliances in relation to eight individuals at the stay hearing but attributed “some instances” of inaccurate reporting to “educator fraud”.
In Ms Tlais’ 1 February 2019 affidavit, the Applicant conceded 59 sessions were reported in error.[27] She disputed 306 sessions in relation to three individuals and claimed that they resulted from fraud by the families. She attached the first three pages of the Child Enrolment Form for each child showing that each parent answered “No” to the question “Do you or your partner work as a family day-care educator?”[28]
[27] At [134].
[28] At Tab 5.
In relation to Lisa Kaddour, Ms Tlais stated that the Applicant immediately terminated Ahmad Kaddour who was caring for the children of his sister, Lisa Kaddour. The termination letter was dated 23 April 2018 and was addressed to a South Hurstville address.[29] Ms Kaddour sent an email to the tip-off line on 27 June 2018 explaining that she had worked as an educator but stopped in February 2016 and assumes that someone had been fraudulently working under her name.[30] That email chain includes Ms Kaddour’s email to Interactive FDC (Family Day Care) dated 12 February 2016. The two pages before the email chain are resignation forms of the same date, for herself and Ahmad Kaddour. Ms Kaddour asked that the matter be investigated because:
Al Huda Daycare and Education have advised that my children’s care will be terminated if i don’t repay roughly a sum of about $10,000, which reflects the earnings that were supposedly claimed under my name during that period.
[29] At Tab 5, page 971.
[30] At Tab 8, pages 1024 to 1028.
Ms Tlais gave further detail during her oral evidence and in her affidavit sworn 31 May 2019. She had initially accepted that the Respondent’s claim that Lisa Kaddour was working for another provider was correct. Later, she found out that the other provider was Igrow. Ms Kaddour had contacted the Department to tell them someone was using her identity to care for other children. The Department did not accept her evidence and said that Igrow FDC was claiming for her. Ms Kaddour had thought it was another provider. She provided a statutory declaration dated 22 May 2019 stating that she had never worked for Igrow.[31] Ms Tlais said that Igrow was in the news for defrauding $5.4 million and that she did not know that it was Igrow because the Department did not provide evidence. She provided a media report about Igrow dated 8 April 2018.[32] Ms Tlais argued that it was unfair to prefer the records of Igrow, which had committed fraud, to the evidence the Applicant had provided. The Applicant also submitted that this non-compliance arose from a recent legislative change.
[31] Tab 2 in FT2 to Ms Tlais’ sworn affidavit of 31 May 2019.
[32] Ibid.
The evidence that Ms Kaddour stopped working for Interactive FDC in February 2016 does not establish that she was not working for another provider from 1 January 2016 to 18 April 2018.
I give no weight to Ms Kaddour’s evidence. First, if she had not been working for another provider during the relevant period, why would she have formed the view that the Department was referring to “another provider”? Secondly, Ms Kaddour’s evidence is not supported by independent reliable evidence. Thirdly, when she swore her affidavit and contacted the tip-off line, she was facing a demand from the Applicant for payment of $10,000 if the alleged non-compliance was accepted by the decision-maker. Finally, she and Ahmad Kaddour were the parent and educator respectively, in another non-compliance that was in issue, that is, care being provided in the home of the children. I have found that non-compliance was established because the Applicant’s records and Ms Tlais’ evidence is not reliable.
I find that Lisa Kaddour did engage in child swapping.
The Applicant falsely and/or inaccurately reported 365 sessions of care where no-one was eligible to receive CCB or CCR.
Reporting 45 sessions of care as absences before care for the child commenced and after it ceased – section 219N
The ARO identified 60 sessions of care as “absences” before and after the Applicant started or ceased providing care to a child. At the hearing, the number of sessions in issue had been reduced to 45 for the period 1 January 2016 to 30 June 2018. The Respondent did not press non-compliance for the 15 sessions for one child. The remaining 45 sessions comprised:
·six absences for two children before they commenced receiving care, and
·39 absences for 22 children after they permanently ceased receiving care by the Applicant.
The Applicant conceded that there was an administrative error in all 45 sessions and pointed out that it had cancelled all the submissions made during the 2017-2018 financial year “whereby once the session is cancelled the funds will be deducted from the Applicant’s subsidy payment”.[33] The Applicant said that the Respondent refused to accept the cancelled sessions as a refund and the Applicant agreed to pay the amount included in the disputed sum as part of the stay agreement.[34] Where the Applicant was unable to cancel the session, it had calculated the amount and deposited it into the Department’s bank account.
[33] Affidavit of 1 February 2019 at [152].
[34] Ibid at [153].
The Applicant did falsely and/or inaccurately report 45 sessions of care as either absences before children commenced care with the Applicant or after the child had permanently ceased care with the Applicant. I accept the Respondent’s submission that cancelling attendance reporting data does not rectify the non-compliance that has occurred and that led to an overpayment.
Late reporting of enrolments and late submission of attendance records – sections 219AB, 219AC and 219N of the Old Administration Act
During the period 1 January 2016 and 30 June 2018, the ARO identified 1558 occasions when the Applicant reported enrolments after the prescribed timeframes in section 219AB of the Old Administration Act had expired. The number of days outside that timeframe ranged from one to 87. This non-compliance is a strict liability offence under section 219AC of the Old Administration Act which indicates that the Parliament views non-compliance very seriously.
For the same period, the ARO identified 998 occasions when attendance reports were submitted after the prescribed timeframes in subsection 219N(5) of the Old Administration Act had expired. The number of days ranged from one to 54 days. This non-compliance is an offence under section 219N of the Old Administration Act.
The Applicant conceded that the attendance reports and the enrolment notices were late. Ms Tlais said that she was not aware that there were specific time frames but there were legitimate reasons for them being late.[35] She set out reasons why enrolment notices were late. To overcome the problem with enrolment notices, the Applicant required proof of a CRN (client reference number) before enrolment.
[35] T15, page 279; Ms Tlais’ 1 February 2019 affidavit at [148].
At paragraph 149 of her 1 February 2019 affidavit, Ms Tlais set out five reasons why late enrolments and late attendance records “may have occurred in the past years of operation” but could not specify a reason why any particular record was late. This demonstrates that the Applicant’s governance arrangements were inadequate. The policy proposals she outlined in [150] reinforces that finding.
The Applicant has conceded that it failed to comply with the reporting obligations set out in sections 219AB and 219N of the Old Administration Act. It has failed to comply with the condition for continued approval imposed by section 196(2) of the Old Administration Act.
I agree with the Respondent, that the Applicant should have been aware of the seriousness of late enrolment and attendance reporting. A competent provider would have been aware that compliance with the reporting time frames was fundamentally important. They are both offence provisions.
Reporting 99 sessions of care for children who attended other services when care was reported to have occurred – section 219N - overlapping sessions
During the period 7 September 2016 to 15 February 2018, the ARO identified from section 219N of the Old Administration Act reports submitted by the Applicant that falsely and/or inaccurately reported 99 sessions of care that overlapped with sessions of care reported by other services. The Applicant disputes that finding.[36]
[36] Ms Tlais’ affidavit of 1 Feb 2019 [126] - [132].
The issue is the weight to be accorded to the Applicant’s evidence and that of the other providers. The Respondent found that the evidence of the other providers should be given greater weight than the Applicant’s evidence. The Applicant accepted that was so in relation to only three of the 11 “providers” listed. It argued that the Respondent’s preferring the evidence of other “providers” was “for no logical reason”. The number 11 refers to children not providers.
The Applicant had stated in its second submission that the child Sayed Mohammad Sakhizada had not attended the service. In her affidavit of 31 May 2019, Ms Tlais denied having made an admission in relation to that child. I accept that is so. Two sessions of care were in issue. She claimed that there was no record of the child ever being enrolled with the Applicant. She attached a screenshot of a search for that name on the Applicant’s Harmony software.[37]
[37] Tab 5 in FT2 to Ms Tlais’ sworn affidavit of 31 May 2019.
The Respondent provided records showing that the Applicant reported the child’s enrolment and sessions of care for periods in 2017, 2018 and 2019.[38] Session reports for the period 25 March 2019 to 19 May 2019 were not paid because the eligible individual did not confirm the enrolment. The child’s name was changed on 1 April 2019 to Sayed Mohammad Taqi but retained the same CRN.
[38] Respondent’s email to Sydney Registry, 3 June 2019, Attachment A.
At the hearing, Ms Tlais provided a copy of two pages of a passport which included the child Sayed Mohammed Taqi and repeated her claim that she had no record of a child called Sayed Mohammad Sakhizada but did have a record of the child Sayed Mohammed Taqi.
Ms Tlais’ evidence shows that the record of the name of the child as Sakhizada was deleted. The CRN remained unchanged. This evidence reinforces the finding that the Applicant’s records and Ms Tlais’ evidence are unreliable. The other service providers provided detailed information.
I am satisfied that the Applicant did report two sessions of care for this child when another service was providing care.
I agree with the ARO’s analysis of the evidence and conclusion in respect of the other ten children which is set out at [90] to [97] of the reviewable decision and Attachment C to it (T2/19-20, 43-73). The other service providers included attendance sheets, enrolment forms, and sleep, food and nappy charts. Ms Tlais was not correct when she asserted that the other providers only provided attendance sheets.[39] I prefer the evidence of other providers to that of the Applicant because its records are unreliable and Ms Tlais’ evidence is unreliable.
[39] Affidavit of 1 February 2019 at [128].
During the period 7 September 2016 to 15 February 2018, the Applicant falsely and/or inaccurately reported 99 sessions of care that overlapped with sessions of care reported by other service providers.
Reporting 1581 sessions of care for which CCB is not payable – section 219N - child’s own home – Lisa and Ahmad Kaddour
During the period 2 July 2017 to 22 April 2018, the ARO identified 1581 sessions of care provided in the child’s own home which were inaccurately reported. Care that occurs in the home of the child is care for which CCB or CCR is not payable.[40]
[40] Subsection 11(1)(b)(i) of the Child Care Benefit (Sessions of Care) Determination 2016.
The Respondent relied on what it described as attendance reports for sessions of care that the Applicant had submitted which showed a Unit 4 address as the home of three children and the educator.[41] It was Attachment A to the Respondent’s Notice of Further Contraventions of the Family Assistance Law, dated 1 August 2018.
[41] T14 at page 274.
The Applicant’s case evolved during the proceeding. In Submission 2, the Applicant said that there must have been an error in the unit number because the children lived in Unit 4 and the educator at Unit 5, where all home visits and risk assessments in relation to the educator occurred.[42]
[42] T15 at page 281.
In Ms Tlais’ 1 February 2019 affidavit, she conceded that there was “a human error in the data entry” but that it had provided care for those sessions and referred to the assertion in Submission 2 that the children and educator lived next door. She attached inspection records of the educator’s home at unit 5, dated 9 July and 8 August 2017.[43]
[43] Annexure FT1/1006-1021.
On 12 February 2019, the Respondent sent an email to the Applicant requesting it to provide proof that the educator Ahmad Kaddour lived next door at Unit 5, such as a lease, driver’s licence, bank statement or utility bill, which it should have as part of its records for verifying educator details.[44] In response, Ms Tlais “confirmed” that in-home care has never occurred between 2 July 2017 and 22 April 2018, that she “had checked further into her records” and Ahmad Kaddour had actually moved from unit 5 to a South Hurstville address in July 2017 and lived with his mother.[45] She explained that the co-ordinator who visited Ahmad Kaddour in July and August 2017 did not inform her that the inspection forms were pre-filled with his old address and Ms Tlais looked at the forms without asking for an explanation. She confirmed that the visits had been to the South Hurstville address.
[44] Annexure D to Respondent’s SOFIC.
[45] Annexure F to Respondent’s SOFIC.
In support, Ms Tlais provided the following documents that included the South Hurstville address: a utility bill for the period 17 March – 16 April 2018 in the name of a female named Kadddour, a quotation for an antenna dated 1 September 2017 addressed to Ahmad Kaddour, and the first page of Mr Kaddour’s Educator Registration Form showing his date of registration with the service as 16 January 2017 and approved first aid training on 1 February 2017.
In her affidavit of 31 May 2019, Ms Tlais stated that family day care residence does not have to be the educator’s own home, and provided reference details.[46] She included three photographs of Mr Kaddour’s mother’s home which she claimed were taken during the annual inspection and which included the dates and time they were taken.[47] Those photographs did not include that information. She provided another set of photographs of the same address which “can be cross-checked”.[48] Three had been downloaded from on 24 May 2019. They showed dates of February 2017, December 2017 and July 2014. In the same group, was a screen shot of 11 small photographs dated “20170720”. On one photo the time was also shown: “12:29 pm”. Along the title bar above the photographs in the screen shot was “Desktop ^ wadad ^ home inspection ^ ahmad kaddour ^ July 2017” and at the end of that “Search July 2017”. Ms Tlais claimed that both sets of photographs prove that care was not provided in the child’s own home.
[46] At [6].
[47] Tab 3 in FT2 to Ms Tlais’ sworn affidavit of 31 May 2019.
[48] Ibid, Tab 4.
During her oral evidence, Ms Tlais said the following. Ahmad Kaddour lived next door to Lisa Kaddour, his sister. She lived at unit 4 and he lived at unit 5. She explained that the administration error occurred because the wrong address, Unit 4, was on his “profile” and was moved to the work sheet. No document headed “profile” has been provided. She then said that the period in issue occurred after he moved, and his profile address needed to be updated. The Applicant regularly visited the educator’s home. The date when the photographs were taken is on the photographs of the house to which he had moved. She pointed out that this is only one case and the Applicant has had 300 educators over the past six years with absolutely no errors in the process of logging in their information to CCMS which should prove that this was an honest mistake.
During cross-examination, Ms Tlais said that she did not know where the Department had got the address that appeared in the table it had prepared that showed the educator and child living in unit 4.[49] She said her records showed that the children lived at unit 4. When questioned about no children appearing in the photographs, she said that the children were at school and they now visit after school. She thinks they are school aged children.
[49] T14 at page 274.
When asked why she did not ask Lisa Kaddour to say in her statutory declaration of 22 May 2019 that her children were not getting care in their home, or ask the educator, Ms Tlais said that Lisa Kaddour was willing to testify. When it was suggested to her that she did not know that care was not provided in the child’s home, Ms Tlais said that she knows where the educator was working from and just because there was an administrative error, that does not prove it was occurring in the child’s home.
During re-examination, Ms Tlais said that the only document that suggested care took place at Unit 4 was that at T14, page 274 of the T documents and that she had seen no inspection reports for Unit 4.
Ms Tlais’ evidence is not accepted for the following reasons. She provided two different explanations. She discarded the first when pressed for independent contemporaneous evidence. I agree with the Respondent that the Applicant should have had some independent contemporaneous record as part of its verification process. The quotation addressed to Ahmad Kaddour does not prove he lived at the South Hurstville address when the quotation was provided. The Telstra bill shows that a female called Kaddour was paying the bill for the billing period. The Applicant provided some of its “records” to support both explanations. In both cases there were “administrative errors”.
The evidence also raises the following questions. Why was the Educator Registration Card not discovered and provided before? Why was no change of address recorded on that document? Why was no record of the change of address provided? What procedure does the Applicant have to require and record a change of address?
The photographs do not “prove” that care was being provided at the South Hurstville address. I accept that the date cannot be changed. However, neither of the inspection reports is dated 20 July 2017 which is the date shown on the photographs in the screen shot. The details in the title bar above the dated photographs indicate that there was a home inspection on that date which was related to Ahmad Kaddour. The evidence does not prove that the Applicant undertook the home inspection. It does not explain how Ahmad Kaddour was involved. Further, if Ahmad Kaddour and his mother were living at the South Hurstville address from July 2017 to at least April 2018, why did the property appear on in December 2017?
In addition to those matters, in support of her claims about Ms Kaddour’s child swapping, Ms Tlais provided Child Enrolment forms for each of Ms Kaddour’s three children that state that the residential address for each of the children, Lisa Kaddour, and her husband, was Unit 5.
No driver’s licence, lease, or bank statement was provided, as requested by the Department in relation to the Applicant’s first or second explanation.
The Applicant has no clear reliable process for determining where care is being provided. It has no clear process for recording changes of address of educators.
I conclude that the Applicant’s records generally are unreliable and Ms Tlais’ evidence is unreliable.
The 1581 sessions of care reported were not “sessions of care” and neither CCB nor CCR was payable.

Another question arose in relation to the care provided to Ms Kaddour’s three children which reinforces the findings that the Applicant’s records generally are unreliable and Ms Tlais’ evidence is unreliable. In her affidavit dated 1 February 2019 Ms Tlais stated:
Families make a co co-contribution to their child care fees and pay to the provider the difference between the fee charged and the subsidy amount.[50](Emphasis added.)
[50] At [21].
In its email to the Applicant’s legal representative dated 12 February 2019, the Department requested proof that Lisa Kaddour had incurred a fee liability and that a fee was in fact charged for the child care allegedly provided. In her response, Ms Tlais addressed what she described as a new accusation and stated:
However, for your information, every parent that enrols their children with Al-Huda Daycare and Education, regardless of their relationship to the educator, is obliged to pay the gap fee to the educator. The signed Parent Agreements for all three children have been attached.
It is the practice of the service that parents pay the gap fee every fortnight directly to the educator, so I do not have any evidence of financial transactions from Lisa Kaddour as she has paid Ahmad Kaddour directly.
Ms Tlais attached three Parent Agreements dated 10 March 2017, signed by Lisa Kaddour, for each of her children.[51] Each included a clause about paying the educator all fees owing for childcare.
[51] Annexure F to the Respondent’s SOFIC.
During oral evidence, Ms Tlais said that families pay the educator and she is not obliged to keep records of those payments, but she does contact parents every fortnight to check the educator’s time sheets.
This apparent change in evidence leads to the question, which version is correct? If the Applicant requires the payment to be made to the educator, it is creating an opportunity for the educator and the parent to act fraudulently. This is relevant to the non-compliance categories of educators and children overseas.
Reporting 4,974 sessions of care where no-one was eligible to receive CCB or CCR Section 219N - children 14 years of age or older
Section 5 of the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (No-one Eligible Determination) provides that certain specified classes of children are children in respect of whom no-one is eligible for CCB or CCR.[52] This includes children of a class specified in subsection 9(1) of the No-one Eligible Determination, that is, children who are 14 years of age or older or attending secondary school. However, if the requirements in subsection 9(2)(a)(i) and (ii) of the No-one Eligible Determination are met in relation to the relevant children, then, CCB or CCR is payable. Relevantly, those requirements are that the child cannot reasonably be left alone in the circumstances and no individual over the age of 18 can provide suitable care for the child.
[52] The Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 was amended by the Child Care Benefit (Children in respect of whom no-one is eligible) Amendment Determination 2017, which commenced on 13 March 2017.
Subsection 9(2)(a)(iii) of the No-one Eligible Determination requires documentary evidence from the otherwise eligible person about those two requirements.
Section 9(5)(a) of the No-one Eligible Determination defines “documentary evidence”:
For subparagraphs (2)(a)(i), (ii) and (iii) a statutory declaration containing a statement from the individual of the reasons that the child could not reasonably have been left alone in the circumstances and why there was no individual over the age of 18 who could have provided suitable care to the child in those circumstances.
The reviewable decision found that the Applicant had provided insufficient evidence to demonstrate that a specified circumstance or exception applies in respect of 14,838 sessions of care for children 14 years or older, or apparent children in secondary school, or 14,606 sessions if a particular child were excluded because an exception could apply to him, and that the service had improperly received CCB and CCR in respect of those sessions.[53]
[53] T2 at page 33 at [192] - [194].
At [195], the ARO said:
Whilst I acknowledge the additional non-compliance was not identified in cancellation notice, I consider the additional non-compliance to be pertinent to my decision. The additional non-compliance further demonstrates the service has inadequate governance arrangements in place to ensure accurate section 219N reports are submitted across a range of is obligations.
The Respondent did not maintain the non-compliance in relation to apparent secondary school children at the hearing, only proceeding in relation to children 14 years or older.
The table “Children 14 years of age or older” attached to the NOIS identified 3,760 sessions of care submitted by the Applicant for the period 13 March 2017 to 20 April 2018 where no-one was eligible to receive CCB or CCR.
In the Applicant’s first submission responding to the NOIS, the Applicant’s representative said:
Please note that all documentary evidence that a specified circumstance or exception applies, has been provided for the tables Children 14 years of age or older and Apparent Children in Secondary School. Hence, there was no sessions of care reported in circumstances where no individual was eligible receive child care benefit.
The table attached to the Respondent’s notice dated 1 August 2018 identified a further 1,214 sessions of care for children 14 years of age or older that the Applicant had submitted for the period 29 April 2018 to 30 June 2018. That is a total of 4,974 sessions of care. The ARO found a total of 4,974 sessions of care for which the children being cared for were 14 years of age or older and no-one was eligible to receive CCB or CCR.
In her affidavit of 1 February 2019, Ms Tlais addressed both categories of children together. She said the following.[54] This “apparent non-compliance” was initially dismissed by the delegate after accepting all the evidence that the Applicant had provided. The ARO decided to reconsider that decision and treat all the sessions submitted as “real contraventions” without giving any consideration to the effort that the Applicant had made to collect evidence from all the families and its sincere attempt to comply with the conditions set by the Department regarding the No-one Eligible Determination. It obtained information from the parents and educators and some of the parents provided statutory declarations.[55]
[54] At [166] - [167].
[55] Ms Tlais’ affidavit of 1 February 2019 at [168].
After quoting the ARO’s finding that the statutory declarations did not address the requirement to explain why the child cannot reasonably be left alone and why there is no individual over the age of 18 who could provide suitable care, at paragraphs 170 to 172 Ms Tlais said:
… almost all of the children enrolled with Al-Huda Daycare and Education live in low socio-economic suburbs with medium to high crimes rates according to the NSW Bureau of Crime Statistics and Research, hence it is assumed that most parents do not feel comfortable allowing their children to travel from school to home on their own and be reasonably left alone at home, especially teenagers who are going through the peak of their physical development. This is a very sensitive time in a child’s life, and his or her maturity level is considered to be low. As well as the fact that the majority of our families are from a conservative Islamic background which automatically sets limits as to how much freedom children have at certain ages.
As a child care service, we exert every effort to accommodate for all families coming from different cultural backgrounds; however, we do share the same conservative way of mind as our families, hence why we understood that working parents could not reasonably leave their child or children home alone.
This common understanding has clouded our judgement in determining whether the information listed in the parents Statutory Declarations covered all the requirements listed in the Eligibility Rules.
Ms Tlais then described the new statutory declaration that had been drafted to overcome the problem and referred two policies that had been adopted.[56]
[56] At [173], Tab 3A and Tab 2, pages 324 and 276.
In her 31 May 2019 affidavit, Ms Tlais said the following.[57] The Respondent had failed to acknowledge that so many new laws had been introduced in a short period of time when family day care was under the microscope for a couple of years. The evidentiary documents she had previously provided showed that she was genuinely trying to abide by the new laws.
It was only the Internal Review officer, who, in an attempt to exaggerate my case, found irrelevant loopholes in my evidence.
[57] At [12] - [14].
Ms Tlais talked about the steps she was taking to address the issue set out in her 1 February 2019 affidavit and provided one sample of an eligible person’s statutory declaration and her employer’s statement about her employment.
The Applicant has not provided convincing evidence that the requirements in subsection 9(2) of the No-one Eligible Determination are met in relation to 4,974 sessions of care for children 14 years of age or older. The Applicant falsely and/or inaccurately reported 4,974 sessions of care where the child was 14 years of age or older and no-one was eligible to receive CCB or CCR payments.
Ms Tlais’ evidence in both her affidavits of 1 February 2019 and 31 May 2019 quoted above, demonstrates that she has not paid proper attention to and does not understand that the Applicant is obliged to comply with legal obligations. They are not “irrelevant loopholes”.
The applicant has received payments that could not be passed on to the relevant individuals and failed to remit payments to the department
The Applicant claims that it has passed on all payments to the relevant individuals as required. It claims that its ethical practice is not to submit timesheets unless the educator has provided a copy of the timesheet signed by the parents. It claims that it cancelled sessions once it became aware of breaches and it is only reasonable to consider an action once the individual is aware of them.
Notwithstanding its position, the Applicant has amended its policies and improved its procedures: “accordingly, every chance of error is eliminated”.[58] It claims to have paid back to the Respondent $67,759.75 for the period 1 July 2015 to 14 April 2018.[59]
[58] Ms Tlais’ affidavit of 1 February 2019 at [179].
[59] Ibid at [180].
I find that the Applicant has breached obligations under the family assistance law relating to receipt and remittal of amounts of child care subsidies. Sections 219B and 219EA of the Old Administration Act require the CCB and CCR to be passed on to the eligible individual as a reduction in fees. Sections 219QB and 219QE of the Old Administration Act require that any amount of CCB and CCR which cannot be passed on to the relevant eligible individuals be immediately remitted to the Respondent. The Applicant’s non-compliances have resulted in its receiving public monies to which it had no legal entitlement and is a debt to the Commonwealth under sections 71CA and 71CB of the Old Administration Act.
The Respondent claims that the Applicant received $112,93.87 to which it was not legally entitled, has repaid $43,675.25 and owes $69,255.62. The difference between the parties’ positions seems to reflect roughly the amount the Applicant has paid pursuant to the stay order on a without prejudice basis. The total is less than the Respondent asserted because it did not press some non-compliances. It is not the Tribunal’s role to determine the quantum of the monies received which were not legally owing. The Applicant emphasised the relatively small amount compared to the total public funds it had been paid since it began operating, which I accept is almost $15 million dollars. I accept the Applicant’s assessment.
Additional Non-Compliance after 2 July 2018
The Respondent argued that there was additional non-compliance after 2 July 2018 with respect to working with children cards (WWCC) and late attendance reports.
For the period 2 July 2018 to 26 February 2019, the Respondent contended that the Applicant failed to notify the Respondent of a change in status of the Working with Children Card (WWCCs) for 7993 sessions of care in relation to six educators.[60] The Respondent was originally of the view that the educators did not hold valid WWCCs. In its response to the allegation, Ms Tlais clarified that the educators held valid WWCCs but conceded that the Applicant did not enter the new expiry date into their CCS profile once the original check was expired. She attached copies of their working with children verification status reports. She had updated expiry dates in CCS.[61]
[60] Annexure E to the Respondent’s SOFIC.
[61] Annexure F to the Respondent’s SOFIC, page 365.
The effect of Ms Tlais’ evidence in her 31 May 2019 affidavit was that the Applicant had not entered the new expiry date in the correct “section” of the CCMS.
The Applicant's failure to report the new expiry dates within 24 hours of the Applicant becoming aware of the change of status, contravenes subsection 204F(1) of the Current Administration Act, which is also an offence of strict liability.[62]
[62] See specifically, section 55 of the Minister's Rules, table item 17.
For the period 2 July 2018 to 26 February 2019, the Respondent contended that there were 594 occasions where attendance reports were submitted after the prescribed timeframes in section 204B of the Current Administration Act, had expired (late attendance reports).[63]
[63] Annexure K to the Respondent’s SOFIC.
The Applicant did not respond to this claim initially.[64] Ms Tlais gave the following explanations in her affidavit of 31 May 2019. The late attendance records occurred during the first two weeks of transitioning from CCMS to CCS, which was a tough period for all child care providers because there were many issues trying to adapt to a new system. The Applicant had difficulties contacting the very busy technical support team for the child care software who would not answer questions on the telephone but asked that a message be left or an email be sent. She attached an email chain beginning with the technical support team acknowledging a phone call from Al-Huda on 14 July 2018, Ms Tlais asking on 18 July 2018 if it was possible to change the levy after the timesheets were proposed and have the change reflected on the payments advices, the technical support team replying on 19 July 2018 saying how that could be done and Ms Tlais asking for assistance twice between 9:35 am and 11:53 am. On 22 July 2018, the technical support team replied noting that it has already been fixed and “are processing”.[65] In addition, the Applicant had issues setting up the new fees and levies, so an entire fortnight was cancelled and resubmitted due to processing the wrong fees. The Applicant should not be judged for matters outside its control.
[64] Annexure F to the Respondent’s SOFIC.
[65] At Tab 7.
The Respondent did not have the opportunity to respond to that new evidence.
Ms Tlais’ evidence is an explanation but does not overcome the fact that there was non-compliance as the Respondent claimed. The cancellation of an entire fortnight was not a technical support issue but the consequence of the Applicant’s mistake, which Ms Tlais was trying to rectify at least from 18 July 2018. She could have sent an email earlier asking that question.
The additional non-compliance after 2 July 2018 with respect to WWCCs and late attendance reports demonstrates that the Applicant continues to lack a fundamental understanding of its legal obligations and continues to have inadequate governance arrangements in place, despite its repeated representations (to the Respondent, and now to the Tribunal) that it has engaged in remedial action to improve its policies.
Conclusion –Conditions relating to accuracy of attendance reports
The Applicant has not complied with conditions for continued approval pursuant to subsections 196(2) and (3) of the Old Administration Act for the reasons set out above.
b) Conditions relating to the Applicant’s suitability to operate a child care service
The Law
The Applicant's non-compliance occurred before 2 July 2018 and is assessed under the legislation as it stood at that time. The Eligibility Rules were repealed on 2 July 2018 and the Administration Act was amended, but the law relevant to the conditions for continued approval and other obligations of the Applicant were saved under item 10 of Schedule 4 to the Amendment Act.
The conditions for continued approval under subsection 196(1) of the Old Administration Act relate to suitability of the Applicant to operate a child care service having regard to the requirements of Parts 2 and 3 of the Eligibility Rules. Part 2 applies to eligibility for approval. Part 3 applies to eligibility for continued approval as a child care service. Section 16 is in Part 3. Subsection 16(1) requires that the operator of an approved child care service must be a suitable person to operate the service. Other subsections of section 16 require an approved child care service to continue to comply with certain suitability requirements in Part 2.
The Applicant maintained that it was suitable to operate a child care service. In her 1 February 2019 affidavit, Ms Tlais set out her qualifications and experience. She claimed that she has learned how to differentiate between genuine people who want to become educators and people looking to defraud the system.[66] She claimed that the Applicant was always known as a ‘legitimate’ service amongst members of the community because it has always refused any individual using the service as an avenue for gaining illegal monies.[67] There was no evidence corroborating this claim. There were tip-offs that suggested that was not the case.[68]
[66] At [49].
[67] At [50].
[68] Annexure C to the Respondent’s SOFIC.
In the same affidavit, Ms Tlais set out the following evidence. “In the past couple of months” she had exerted every effort to improve the operation of the service and to block any loopholes that may compromise the Applicant’s approval.[69] She gave an undertaking to further her knowledge and skills by enrolling in “relevant training courses”.[70] She acknowledged the benefit of holding and improving professional qualifications and therefore, the Applicant has introduced a Continuous Professional Development (CPD) policy effective from 7 January 2019 to conduct regular training courses for its educators, staff and Ms Tlais. Copies of the CPD Plan 2019 – Staff and Educators, and the policy were provided.[71] Ms Tlais set out details about a course on 18 February 2019 in which she and the “nominated supervisor” were enrolled and attached an invoice dated 23 January 2019.[72] She was also enrolled for a workshop for Directors of Child Care Services and attached a copy of the invoice dated 30 January 2019.[73]
[69] At [51].
[70] At [52].
[71] At Tab 1 and Tab 2 respectively.
[72] At Tab 1.
[73] Ibid.
At the hearing, Ms Tlais said that she completed the first course but could not attend the second.
The Applicant runs a business that receives large amounts of public funding which is required to be passed on to eligible individuals as fee subsidies for child care. The evidence demonstrates that the Applicant operates an administrative centre which enrolls children of eligible persons, connects the children with an educator that it employs or with whom it contracts, and lodges electronic attendance reports based on information the educator provides. I infer that it pays a proportion of the subsidy to the educator. The non-compliances discussed above show that the information the educators have provided has been inaccurate and unreliable on many occasions. The most recent version of Ms Tlais’ evidence is that the eligible person pays the educator the difference between the subsidy and the cost of the child care and the Applicant holds no records about that payment. That evidence leads to the conclusion that the Applicant has no record of and no knowledge of the amount of the gap payment. The Applicant’s own records are unreliable. The totality of the evidence shows that the Applicant does not exercise effective oversight of its staff or contractors or the child care service it purports to provide.

The Respondent contended that the Applicant was not a suitable person because of specific instances of failing to comply with the Eligibility Rules. Subsection 7(1) of the Eligibility Rules provides that the Applicant for approval of child care service must be a suitable person to operate the service. Subsection 7(2) of the Eligibility Rules sets out matters that the Respondent may consider in making that assessment.
I find that the Applicant’s non-compliance history discussed above demonstrates that it:
·     lacks expertise and experience in providing child care (subsection 7(2)(a) of the Eligibility Rules). I acknowledge that it has been running the business for several years, however the number and seriousness of non-compliances set out above demonstrate its lack of expertise, despite the years of running the business. The length of the Applicant’s “experience” has not resulted in a commensurate increase in expertise.
·     does not have the ability to meet and provide the appropriate quality of child care (subsection 7(2)(b) of the Eligibility Rules) because its oversight of educators and its knowledge of when, where, and what they are doing, is inadequate.
·     has inadequate governance arrangements (subsections 7(2)(c)(i) and (ii) of the Eligibility Rules). It has falsely and/or inaccurately reported hundreds of sessions of care where no care could have been provided because the educator or the child was overseas. It has falsely and/or inaccurately reported thousands of sessions of care where no CCB or CCR was payable because the care was provided in the child’s own home. The Applicant gave possible explanations for those non-compliances. Its records are unreliable. Ms Tlais’ evidence is unreliable. The Applicant has not provided persuasive evidence as to why the non-compliances occurred. I am not persuaded that the governance measures the Applicant has or proposes to introduce will be adequate, given its history of non-compliance, the unreliability of its records, and Ms Tlais’ resistance to accepting and acknowledging the obligations imposed upon the Applicant as a child care service provider.
·     lacks an understanding of its obligations under the family assistance law and is not committed to complying with them (subsection 7(2)(d) of the Eligibility Rules). The Applicant has admitted not understanding some of its obligations, including that it was not aware of the prescribed timeframes for submitting enrolments and attendance reports. It has sought to blame others. I also refer to my comments about its new and proposed governance measures in the previous paragraph.
·     has a poor record of financial management (subsection 7(2)(g) of the Eligibility Rules). The Applicant has a debt due to the Commonwealth, the amount of which is in dispute as discussed at [136] and [137].
Subsections 7(2)(e) and 11 of the Eligibility Rules require consideration of the Applicant’s compliance with laws of the Commonwealth or a State or Territory. During the period 1 January 2016 to 30 June 2018, the ARO identified 13 educators who provided care to more than seven children at any one time over 330 sessions contrary to the educator to child ratios prescribed under regulation 124 of the National Regulations.
The ARO also identified one session of care relating to the one educator where the care was reported for more than four pre-school aged children at any one time.
The Applicant asserted in Submission 3 that those identified sessions were “mere human error” resulting from either the educators filling in the wrong days on the timesheets or the administration had erred when submitting the timesheets. Ms Tlais accepted responsibility and said that she did cancel all the sessions once they came to her attention, calculated the amount owing, and deposited the money into the Respondent’s bank account.
At the Stay Hearing, the Applicant conceded that it had reported incorrectly in relation to 330 sessions of care.
In her affidavit of 1 February 2019, Ms Tlais accepted responsibility for “these errors” but disputed the total number of “sessions” for the following reasons.[74] They were one-hour blocks. A session can have a minimum of 2 hours or a maximum of 12 hours per day. It is illogical for each hour to be counted as one session.
[74] At [160] - [161].
The Respondent accepted that they were 330 one-hour blocks between 1 January and 30 June 2018.
Following the amendments the Applicant made, it claims that the amounting owing to the Respondent for this non-compliance is $3,821.21 and not $18,321.54 as the Respondent claimed.[75]
[75] At [163].
Ms Tlais addressed the issue in her affidavit of 31 May 2019.[76] She emphasised that there were 330 hours, not occasions, over two and half years. She had entered 1,134,363 hours into CCMS for a period of two years. The percentage of errors was 0.00029%.
This percentage should indicate to any person with a fair judgment that this was simply human error.
[76] At [20] - [23].
She submitted that the attached “Educator Child Limit History Report” showing that no breach of the ratio occurred from 2 July 2018 to 5 May 2019 following amended service policies.[77] The Report has apparently been generated on the Applicant’s software.
[77] At Tab 8.
The Respondent provided a print-out of records that contradicted that claim. It showed that the Applicant had reported 90 occasions (one-hour blocks) where eight educators had provided care to more than seven children at any one time between 2 July 2018 and 5 May 2019 in contravention of regulation 124 of the National Regulation.
Ms Tlais claimed that her records become the Respondent’s records. That cannot be correct. The Respondent’s records contradicted the Applicant’s records. The Applicant’s records continue to be unreliable after it has amended policies and procedures and the importance of compliance has been brought to its attention.
The Applicant did not notice it was entering data on a total of 420 occasions that contravened its obligations under Regulation 124 of the National Regulations. Its response in relation to the 330 breaches was to claim there had been human error and amend the records, as far as it was able to do so.
I accept the Respondent’s submission that exceeding educator to child ratios raises an unacceptable risk to the health, safety and well-being of children and that it is in the public interest that child services strictly comply with those ratios.
The Applicant failed repeatedly to comply with the obligations imposed by Regulation 124 of the National Regulations and therefore failed to comply with a condition for continued approval imposed by subsection 196(3) of the Old Administration Act.
The Applicant’s reporting of incorrect information and the subsequent amendment when the Respondent brought the matter to the Applicant’s attention is not consistent with its being a suitable person to operate a child care service because it is inconsistent with its obligations to establish the “governance arrangements” referred to in section 7(2)(c) of the Eligibility Rules.
On 31 January 2019, the Applicant applied to amend attendance data for five children from June 2018, six months after the inaccurate report had been submitted. That is another instance which is inconsistent with the Applicant’s obligations to establish “governance arrangements” referred to in subsection 7(2)(c) of the Eligibility Rules. That paragraph refers to subsections 7(2)(d) and (e) of the Eligibility Rules which refer to the Applicant’s understanding of and compliance with, its obligations under the family assistance law and its record of compliance with laws of the Commonwealth or a State or Territory.
Section 10A of the Eligibility Rules provides, in effect, that the Applicant for approval (who becomes the operator) must undertake to do the things set out in that section to monitor compliance with section 8 of the No-one Eligible Determination which in summary relates to child-swapping. The Applicant falsely and/or inaccurately reported 365 sessions of care where no-one was eligible to receive CCB or CCR (child swapping) for the reasons set out at [67] to [75].
Section 10A(1) of the Eligibility Rules requires the service to ensure that within 7 days of the date on which a child is enrolled for care by an individual, the service will ask whether the eligible individual or that person’s partner is an FDC carer and ask the eligible individual to inform the service if, in the future, the eligible individual or that person’s partner becomes an FDC carer.
The Applicant submitted enrolment forms in relation to three parents.[78] Each form included a declaration to the effect that neither the eligible individual nor her partner was a family day care educator with a circle to answer “yes” or “no”. The form does not require the declaration to be dated or signed. The form does not require the eligible individual to inform the service if, in the future, either that person or his/her partner becomes a family day carer. That evidence does not satisfy the requirements of subsection 10A(1) of the Eligibility Rules. Ms Tlais implicitly acknowledged this in her 1 February 2019 affidavit when she reported that the updated policy would require parents to provide statutory declarations confirming that they do not work as family care educators and must give notice to the service if they intend to do so in the future.[79] I infer that the Applicant was unaware of the requirement until the Respondent raised it. The child-swapping non-compliance was not caused by the parents’ fraud. It was a result of the Applicant’s poor governance caused by ignorance of its obligations.
[78] Exhibit FT1/956-969 to Ms Tlais’ affidavit of 1 February 2019.
[79] At [135].
Section 10AB of the Eligibility Rules has the effect that where care is provided to a child who is 14 years of age or older (to whom subsection 9(2) of the No-one Eligible Determination applies) the Applicant for approval (who becomes the operator) must undertake to keep a register of certain information and documents. This matter is discussed above at [118] – [133]. Ms Tlais’ attitude to the ARO’s finding on this matter as a “legal loophole” reflects a fundamental failure to understand that the Applicant has to comply with obligations. The Respondent sent the Applicant an explanation of this obligation on 2 March 2017.[80] The Applicant has access to the Child Care Provider Handbook that is available on the Respondent’s web-site and which refers to this obligation.[81] I agree with the Respondent, that the Applicant should have known that a child aged 14 years or older was not entitled to CCB or CCR unless a specified exemption applied. The Applicant’s excuses and minimising its responsibility for that failure supports the finding that it is not a suitable person to operate a child care service.
[80] T25 at pages 564 - 565.
[81] In 2016 it was called the Childcare Service Handbook 2016 and was available on the Respondent’s web-site.
The above consideration leads to the conclusion that the Applicant is not a suitable person and the Applicant’s history of non-compliance does not satisfy subsection 196(1) of the Old Administration Act. It has not satisfied a condition for the continued approval of an approved child care service.
Issue 2: Whether a sanction should be imposed?
Is it appropriate to impose a sanction pursuant to subsection 195H(1) of the Current Administration Act? Subsection 195H(2) of the Current Administration Act requires the decision-maker to have regard to matters prescribed by section 52 of the Minister's Rules when exercising the power under subsection 195H(1) of the Current Administration Act. Subsection 52(2) of the Minister's Rules makes clear that section 52 does not limit the matters that may be taken into account.
The Applicant argued that no sanction should be imposed because of the small percentage of errors, the small amount of overpayment, and that there was no deceit.
Addressing the relevant matters in subsection 52(3) of the Minister’s Rules, having considered the Applicant’s non-compliance, I conclude that its non-compliance:
·is not an isolated incident; it has a history of proven contraventions, including after the reviewable decision was made (subsection 52(3)(a));
·has resulted in overpayments of CCS, the amount of which is in dispute (discussed at [137]) and is likely to result in overpayments (subsection 52(3)(b));
·involves the reckless giving of inaccurate, false or misleading information to the Respondent (including a report under subsection 204B(1) of the Current Administration Act (formerly section 219N of the Old Administration Act) (subsection 52(3)(d));
·is associated with a debt to the Commonwealth (whether or not discharged) (subsection 52(3)(e));
·is serious in nature (subsection 52(3)(f)); and
·is associated with other relevant aggravating factors in relation to the non-compliance (subsection 52(3)(g)).
Given the Applicant’s history of non-compliance, it is likely that there will be non-compliance in the future which will result in overpayments of CCS (subsection 52(3)(b) of the Minister's Rules). The Applicant’s non-compliance has been consistent and persistent. A notice of non-compliance was issued to the Applicant in 2015.[82] Ms Tlais did not believe that there were the non-compliances alleged in that notice and relied on the primary decision-maker’s not mentioning that instance of non-compliance to rebut the suggestion that the Applicant had been alerted to non-compliance at that time and should have been more assiduous in ensuring it complied with its obligations.
[82] [T5 to T9].
The April 2015 notice referred to breaches of continued approval including:
a)that the Applicant reported attendances or absences before care had started for a significant number of children;
b)that the Applicant reported attendances or absences after care had ceased for a significant number of children;
c)that the applicant reported attendances or absences for days where care was not provided to a significant number of children; and
d)that the Applicant reported full day sessions for a significant number of children on days that the children attended school.
The Applicant has resisted and continues to resist accepting responsibility for its non-compliance. It minimises the seriousness of its non-compliance. It refers to the small percentage of “administrative errors” compared to the overall number of data entries and the relatively small amount it was overpaid. It provided an article from Invensis.net to support its argument that the percentage of data entry errors was low. It relies on new policies and procedures, including new professional development strategies.
The Respondent was able to demonstrate in the short time it had available to consider Ms Tlais’ affidavit of 31 May 2019, including during cross-examination that her evidence and the Applicant’s records continue to be unreliable. The Applicant has been operating for several years. It has had the opportunity to implement appropriate governance measures. It did not do so. I give little weight to the new policies and procedures it has and proposes to implement given its history of non-compliance and unwillingness to acknowledge its responsibility to meet its obligations. A striking example is Ms Tlais’ change of evidence about who is paid the gap fee when specifically requested, in relation to care being provided in the child’s own home, to provide evidence that Lisa Kaddour had incurred a fee liability. In any event, the new policy documents contain high level and general statements without detailed procedures to implement them.
In summary, the non-compliance is very serious in nature (subsection 52(3)(f) of the Minister’s Rules) because the Applicant:
·reported thousands of sessions of care inaccurately;
·demonstrated a lack of knowledge of its obligations under the family assistance law;
·failed to supervise its staff and contractors effectively;
·provided inadequate supervision of children contrary to section 124 of the National Regulations; and
·minimised its responsibility for non-compliance.
The Respondent argued that there were relevant aggravating factors in relation to the non-compliance (subsection 52(3)(g) of the Minister’s Rules):
·Dishonest behaviour, or inadequate governance arrangements; and
·Non-compliance continued after the reviewable decision was made.
The discussion about the Applicant’s change of positions and evidence in relation to child swapping and care being provided in the child’s home demonstrates vividly the inadequacy of the Applicant’s governance arrangements. The Applicant’s records are unreliable. The extent and breadth of non-compliance leads to the conclusion that it is systemic.
The Applicant’s continuing non-compliance after the reviewable decision was made is also an aggravating factor. Its records and Ms Tlais’ evidence continue to be unreliable, as the Respondent demonstrated in response to her affidavit of 31 May 2019.
It is appropriate to impose a sanction.
Issue 3: Which sanction should be imposed?
Subsection 195H(1) of the Current Administration Act provides that if the Respondent is satisfied that an approved provider has not complied, or is not complying, with a condition for continued approval of the provider, the Respondent may take one or more of a range of measures including suspending or cancelling the provider’s approval, suspending the approval in respect of one or more child care services, varying the provider’s approval, or suspending payments for a maximum of three weeks.
Subsection 195H(2) of the Current Administration Act requires the Respondent to have regard to the matters prescribed by the Minister’s Rules. Subsection 52(4) of the Minister’s Rules sets out those matters.
The Applicant argued that if a sanction were imposed, it should be aimed specifically at governance issues, requiring the Applicant to engage an independent consultant in relation to its procedures. It argued that the Applicant was continuing to operate, there was no issue with the quality of care provided and that cancellation would have a significant adverse impact on the community because there would be disruption to 300 children and 40 educators, people will go elsewhere, and problems with educators would not be overcome by their signing up with new providers. Ms Tlais argued that there were limited child care providers in the area where the Applicant operated and that there would be no demand for its service if the approval was cancelled or suspended because people could not afford to pay for care without the CCS.
The Respondent argued that the Applicant’s approval should be cancelled.
Subsection 52(4)(a) the Minister’s Rules first requires the Respondent to consider whether it would be more appropriate to exercise the power to suspend the provider’s approval under subsection 195H(1)(a) of the Current Administration Act rather than to impose a different sanction having regard to three matters:
(i)The first matter is 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).[83] I have found that the Applicant’s non-compliance is systemic and ongoing. There has been non-compliance over a number of years which has resulted in thousands of contraventions. The Applicant’s records continue to be unreliable throughout the review process, up to and including those provided in Ms Tlais’ affidavit of 31 May 2019. The adopting of new policies and procedures discussed by Ms Tlais in that affidavit, her affidavit of 1 February 2019 and at the hearing have not improved that fundamental failure of governance. Ms Tlais is effectively the Applicant. Her evidence is unreliable. This consideration suggests that it may be more appropriately dealt with through cancellation than suspension.
(ii)The second matter is whether the 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).[84] The Applicant emphasised the relatively small amount of the debt compared to the public funds it has received. The evidence does not disclose exactly the total payment to the Applicant during the period of non-compliance from 2016 to 2018. The amounts set out in the Respondent’s email of 3 June 2019 indicate that would be at least $6 million. I accept that the total of the disputed debt is relatively small compared to that amount, but it is significant. The Applicant withdrew concessions made during the stay hearing when faced with the prospect of paying a proportion of it as a condition of the stay. I have concluded that the Applicant’s non-compliance has resulted in a significant debt of CCB and is likely to result in overpayments of CCS or ACCS if the approval is not suspended because of its continuing fundamental failure of governance.
(iii)The third consideration under subsection 52(4)(a) of Minister’s Rules is any other relevant matters.[85] The Applicant has and continues to demonstrate that it does not understand its obligations under the family assistance law which indicates that it should not be an approved provider of child care.
[83] Subsection 52(4)(a)(i) of the Minister’s Rules.
[84] Subsection 52(4)(a)(ii) of the Minister’s Rules.
[85] Subsection 52(4)(a)(iii) of the Minister’s Rules.

Subsection 52(4)(b) of the Minister’s Rules requires the Respondent to consider whether it would be more appropriate to cancel the provider’s approval under subsection 195H(1)(b) of the Current Administration Act than to impose a different sanction, having regard to five matters:
(i)Subsection 52(4)(b)(i) of the Minister’s Rules specifies 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. The discussion of the Applicant’s non-compliance shows that it has resulted in significant and multiple overpayments of CCB and is likely to result in significant and multiple overpayments if the approval is not cancelled because of its demonstrated past and continuing fundamental failure of governance and its lack of understanding of its obligations.
(ii)Subsection 52(4)(b)(ii) of the Minister’s Rules specifies 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. The Applicant has demonstrated a reckless disregard for the obligation to comply with conditions for continued approval. That is apparent from the detailed discussion of its non-compliance.
(iii)Subsection 52(4)(b)(iii) of the Minister’s Rules specifies 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 1999 (Cth). Section 194E of the Current Administration Act specifies 12 matters to which regard must be had to determine whether a person is a “fit and proper person”. I consider each in turn:
·the Applicant’s non-compliance with Commonwealth and State laws (the National Law) is serious, frequent and ongoing;[86]
[86] Subsection 194E(1)(a) of the Current Administration Act.
·there is no evidence of any proceedings, other than this proceeding, currently before a court or Tribunal, that involve the Applicant;[87]
[87] Ibid ss (b).
·there is no evidence of any decision, other than the reviewable decision, made under a law of the Commonwealth or a Sate or Territory relating to child care which adversely affects the Applicant;[88]
[88] Ibid ss (c).
·subject to Part VIIC of the Crimes Act 1914 (Cth), there is no evidence of any conviction or finding of guilt against the Applicant 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;[89]
[89] Ibid ss (d).
·there is no evidence of any order for the Applicant to pay a pecuniary penalty for the contravention of a civil penalty provision of a law of the Commonwealth or a State or Territory;[90]
[90] Ibid ss (e).
·the evidence does not establish and the Respondent did not contend that the Applicant's conduct involved fraud or dishonesty;[91] the Tribunal is not dealing with possibilities and does not embrace the Respondent’s assertion that the Applicant’s conduct demonstrates such large scale neglect that this could not be discounted as a possibility; it has found that the Applicant’s records and Ms Tlais’ evidence is unreliable for the reasons set out earlier in this decision, including in relation to the 1581 sessions of care in the child’s own home;
[91] Ibid ss (f).
·the consideration of non-compliance set out above demonstrates that the Applicant had no, or inadequate, governance arrangements to ensure that the Applicant, its staff, educators, and parents/guardians complied with the family assistance law;[92] for reasons given [35] –[147] the Applicant's new policies are not going to ensure future compliance with the family assistance law;
·the consideration of non-compliance set out above demonstrates that the Applicant has a poor record of administering Commonwealth funds because the Applicant has a debt to the Commonwealth,[93] and has on numerous occasions, failed to pass on a fee reduction and not immediately remitted the payment to the Respondent;
·the Applicant owes a significant debt to the Commonwealth;[94]
·there is no evidence of insolvency or external administration involving the Applicant;[95] this provision does not require repetition of matters addressed in subsections 194E(1)(h) and (i);
·other matters prescribed by the Minister's Rules;[96] the Applicant has some experience as a provider but as found above, its expertise is not commensurate with the length of its experience, as demonstrated by its past and on-going non-compliance with and lack of understanding of its obligations under the family assistance law;[97] there is no evidence to suggest that the circumstances in subsections 46(4) and 46(5) of the Minister's Rules exist; and
·any other matter Respondent considered relevant:[98] for reasons set out earlier in this decision, I am not satisfied that the Applicant's recently adopted and proposed procedures and policies will ensure that it complies with its obligations under the family assistance law.
(iv)Subsection 52(4)(b)(iv) of the Minister’s Rules specifies 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. The Applicant’s non-compliance with the educator to child ratio set out at [156] to [157] and its lack of knowledge of when, where and whether care took place, as demonstrated for example, by its non-compliance in relation to educators and children overseas and care in the child’s own home, shows that 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)Subsection 52(4)(b)(v) of the Minister’s Rules specifies any other relevant matters. The Respondent referred to the Applicant’s proposed new policies and post-reviewable decision non-compliance. I agree that little weight should be given to the recently implemented and proposed policies and procedures because they do not address the fundamental governance problem of unreliable records and evidence from Ms Tlais, which continued to be exposed up to and during the hearing. The policies do not provide detailed procedures. The Applicant has not adopted an obvious measure that is likely to improve the accountability of educators and parents, that is, requiring payment of the gap fee to the provider and not to the educator.
[92] Ibid ss (g).
[93] Ibid ss (h).
[94] Ibid ss (i).
[95] Ibid ss (j).
[96] Ibid ss (k).
[97] Subsection 46(2) of the Minister’s Rules.
[98] Subsection 194E(1)(l) of the Current Administration Act.
Having regard to the matters prescribed in section 194E of the Current Administration Act, I conclude that the Applicant is not a ‘fit and proper person’ for the purpose of the family assistance law.
CONCLUSION
Having regard to the above matters, I have concluded that the Applicant’s approval as a provider of child care services should be cancelled pursuant to subsection 195H(1)(b) of the Current Administration Act.
DECISION
The reviewable decision is affirmed.

I certify that the preceding 197 (one hundred and ninety- seven) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

...........[sgd]........................................................
Associate
Dated: 29 June 2020

Date(s) of hearing: 4 June 2019

Counsel for the Applicant: Ms J Mee

Solicitors for the Applicant: Mr H Alameddine- Birchgrove Legal

Solicitors for the Respondent: Mr T Aviram - Clayton Utz

Date	Event
14 July 2014	The Applicant was granted approval as a childcare provider under the family assistance law.
16 April 2015	Following a review of the Applicant’s compliance, the Respondent issued a notice of non-compliance for breaches of conditions for continued approval including that the Applicant reported: (a) attendances or absences of children before care had started to be provided by the Applicant for a number of children; (b) attendances or absences of children after care had ceased to be provided by the Applicant for a number of children; (c) attendances or absences for days where care was not provided by the Applicant for a number of children; (d) full day sessions for a number of children on days that the children attended school.(T5 to T9)
6 May 2015	The Applicant responded to the alleged non-compliances.(T10)
13 October 2015	The Respondent sent a form letter to the Applicant about child swapping measures that came into effect on 12 October 2015. (T11)
6 October 2016	The Respondent sent a form letter to the Applicant about a number of payment integrity measures, including stricter rules about reporting child care that is purported to have taken place in a child’s own home.(T23)
2 March 2017	The Respondent emailed the Applicant about compliance measures, including about reporting child care that is purported to have been provided to older children who are extremely unlikely to attend child care.(T25)
20 April 2018	The Respondent issued to the Applicant a Notice of Intention to Impose Sanction (NOIS) under section 200(1)(e) of the Old Administration Act.(T12)
4 May 2018	The Respondent issued a notification to the Applicant warning that the Respondent was monitoring inaccurate attendance reporting closely and would consider taking compliance action in respect of providers who provided inaccurate reports.(Annexure C to the RASOFIC)
15 May 2018	The Applicant made submissions in response to the NOIS (Submission 1).(T13)
2 July 2018	CCS introduced.
1 August 2018	The Respondent issued to the Applicant a Notice of Further Contraventions of the Family Assistance Law.(T14)
15 and 16 August 2018	The Applicant made submissions in response to the 1 August notice. (Submission 2)
21 September 2018	Delegate of the Respondent decides to cancel the Applicant’s approval pursuant to section 195H(1)(b) of the Current Administration Act, with effect from 8 October 2018.(T16)
24 September 2018	Ms Tlais contacted Mr Alameddine, a solicitor.[12]
26 September 2018	The Applicant requested an internal review of the cancellation decision.(T17)
3 October 2018	The Respondent acknowledged request for internal review and invited the Applicant to provide new or supplementary information for the internal review officer’s consideration.
12 October 2018	The Applicant responded to the department’s 3 October invitation to provide information which included 23 attachments. (Submission 3)
1 November 2018	An Authorised Review Officer (ARO) affirmed the cancellation decision.(T2)
2 November 2018	The Applicant applied for review of the ARO’s decision and a stay.
23 November 2018	The Applicant’s submissions in support of the stay application.
30 November and 3 December 2018	Hearing of stay application.
4 December 2018	Stay granted with conditions including that within 7 days of receipt of the decision, the Applicant repay monies it owes in respect of the breaches it acknowledges, as agreed with Respondent.
9 December 2018	The Applicant pays sums of $10,450.68 and $177.57.
12 December 2018	The Applicant pays the sum of $4,174.88, totalling $14,803.13. The Respondent calculated monies owing for the acknowledged breaches totalled $43,675.25. The disputed sum was $28,917.12.
14 December 2018	The Tribunal found that the conditions of the stay order had not been met and the stay no longer had effect.
20 December 2018	After the Applicant commenced proceedings in the Federal Court challenging that decision, the Tribunal granted a stay, by consent, subject to the condition that within 24 hours of the time that the order was notified to the Applicant, the Applicant is to pay to the Respondent the sum of $28,917.12, on account only and without prejudice to the parties' positions as to whether such amount is otherwise owing.
1 February 2019	Affidavit of Ms Tlais and Applicant’s SOFIC filed.
12 February 2019	The Respondent emailed the Applicant providing an opportunity to provided additional information about its non-compliance.(Annexure D)
13 February 2019	The Respondent emailed the Applicant to invite comments on additional non-compliance that had been identified.(Annexure E)[13]
22 February 2019	The Applicant responded to the emails of 12 and 13 February 2019.(Annexure F)
1 March 2019	Respondent’s SOFIC filed.
17 May 2019	Respondent’s Amended SOFIC (RASOFIC) filed.
31 May 2019	Applicant files and serves an affidavit and annexures from 4:45 pm to 4:51pm.

Date(s) of hearing:	4 June 2019
Counsel for the Applicant:	Ms J Mee
Solicitors for the Applicant:	Mr H Alameddine- Birchgrove Legal
Solicitors for the Respondent:	Mr T Aviram - Clayton Utz