Australian Institute of Technical Training Pty Ltd and Australian Skills Quality Authority - [2020] AATA 1641

Australian Institute of Technical Training Pty Ltd and Australian Skills Quality Authority [2020] AATA 1641 (7 May 2020)
Division:GENERAL DIVISION
File Numbers: 2018/0323; 2018/0326
Re:Australian Institute of Technical Training Pty Ltd
APPLICANT

AndAustralian Skills Quality Authority
RESPONDENT

Minister for Education and TrainingAnd
RESPONDENT

DECISION
Tribunal:The Hon. Matthew Groom, Senior Member
Date of Decision: 7 May 2020
Date of written reasons: 4 June 2020
Place:Melbourne

For the reasons given orally at the conclusion of an interlocutory hearing in this matter, the Tribunal ORDERS that:

1.    the Tribunal’s Orders of 28 June 2019 be vacated; and
2.    the Orders of the Tribunal of 11 May 2018 be varied in the following terms:
a.    the following be added:
(g)the Applicant may:
i.enrol a new student into a VET course or part of a VET course; and
ii.allow a VET student to begin a VET course or any part of a VET course, on the condition that, at all relevant times, the number of students who have commenced a VET course or part of a VET course does not exceed 350 in number.

...........................[sgd]........................................
The Hon. Matthew Groom, Senior Member
Catchwords
PRACTICE AND PROCEDURE – application for variation of a stay order –– relevant considerations for variation of stay order – whether proceedings likely to be rendered nugatory if application not granted – interlocutory application granted
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Cases
Australian Institute of Technical Training Pty Ltd and Minister for Education and Training [2018] AATA 5392
Scott v Australian Securities and Investments Commission [2009] AATA 798
WRITTEN REASONS FOR ORAL DECISION
The Hon. Matthew Groom, Senior Member
4 June 2020

This is an interlocutory application brought by the applicant to vary a stay order first made on 6 February 2018 and subsequently amended on 11 May 2018 and then again on 28 June 2019. The application was heard by telephone hearing on 29 April 2020 and 7 May 2020.
A decision was made and oral reasons were given at the interlocutory hearing. Subsequently, the respondent requested that the oral reasons be provided in writing. The written reasons that follow are based on the oral reasons given at the interlocutory hearing.
The substantive applications in the matter involve a review of:
(a)in respect of the first application, a decision by Australian Skills Quality Authority (“ASQA”) made on 20 December 2017 in accordance with sections 36(2)(f) and 39 of the National Vocational Education and Training Regulator Act 2011 (the “NVR Act”) to cancel its registration as a registered training Organisation; and
(b)in respect of the second application, a decision made by the Minister on 20 December 2017 in accordance with section 83(3)(c) of the Education Services for Overseas Students Act 2000 (the “ESOS Act”) to cancel the applicant’s registration as a registered provider for all courses at all locations.
A hearing in respect of the substantive applications was held between 25 and 28 June 2019. Each of the parties made post-hearing submissions, the last of which was received by the Tribunal on 6 August 2019. The matter was reserved for final decision on that date.
In early February of this year, newly appointed legal advisors for the applicant wrote to the Tribunal and the respondent, to advise of a possible intention to make an application to reopen the case in order to present new evidence, and also to make an application to vary the stay order to allow for the enrolment of new students.
By letter dated 16 April 2020, the applicant’s legal representatives wrote to the Tribunal and made formal applications for both the reopening of the case to present further evidence and also, the variation of the stay order as previously referred. In support of its application, the applicant lodged an affidavit of Mr Sandeep Sidhu, Chief Executive Officer of the applicant, sworn on 21 April 2020.
In relation to the stay variation, the applicant submitted that because of the anticipated delay in a final decision being made in respect of the substantive applications and the cumulative financial impact it had suffered as a consequence of the stay conditions, it was unlikely that the applicant would remain solvent and be able to continue to trade for the period of time that it was now expected it would take for the further evidence to be submitted and for the Tribunal to make its final decision. The applicant contended that in those circumstances, there was a genuine risk that the proceedings would be rendered nugatory unless the stay variation was granted.
The Tribunal initially heard the applications by way of telephone hearing on 29 April 2020. For the reasons that were given orally at the conclusion of that hearing, the Tribunal granted leave for the applicant to reopen its case to present its further evidence. In relation to the stay variation, the Tribunal indicated to the parties that it accepted that the further time it would take to enable the applicant to present its new evidence and for the Tribunal to make its final decision was likely to have an ongoing adverse impact on the applicant’s financial position. Further, that it accepted that there was a genuine risk that the applicant’s solvency may be at risk and that if it did become insolvent, then there was a real possibility that the substantive application would be rendered nugatory.
The applicant contended that if the Tribunal allowed limited further enrolments, but subject to a cap of 350 students, it believed it would be in a position to avoid an adverse financial outcome pending the finalisation of the matter. The Tribunal adjourned the stay variation application to enable the applicant to provide further affidavit material in support of its claim that the imposition of a cap at 350 students would enable the applicant to remain solvent and thereby avoid the potential for the application to be rendered nugatory.
The applicant has provided further material in support of its contentions by way of a further affidavit of Mr Sandeep Sidhu, sworn on 2 May 2020. In that affidavit, Mr Sidhu attests to the following:
(a)The applicant is currently making a loss at the rate of approximately $70,000 per month.
(b)If the stay is not varied to enable new students to be enrolled, then it is anticipated the applicant will cease to be able to trade within two to three months and that, as a consequence, staff would be unemployed and students would be required to complete their studies elsewhere.
(c)However, in the alternative, if the stay is varied to allow the enrolment of new students, then it is anticipated that the applicant would remain able to trade, would return to profitability from July 2020 onwards, and would remain viable for the time anticipated to enable the new evidence to be heard and for the Tribunal to hand down its decision. This would also allow students currently studying to complete their courses.
The respondent opposes the stay variation. It submits that:
(a)the applicant has presented insufficient evidence for the Tribunal to be confident that the applicant is able to continue to provide its education services, including to its new students, at the requisite level.
(b)the applicant has provided no explanation as to how it would propose to deliver practical training in the COVID-19 environment and that therefore its forward projections are not reliable.
(c)the applicant’s financial projections do not appear to account for certain costs that should be reasonably anticipated, including dealing with a backlog of students who are requiring face to face training and assessment, purchasing new resources for its Certificate for Automotive Mechanical Diagnosis and Diploma of Automotive Management and undertaking retraining and reassessment of previous students found not to have been trained and/or assessed to the requisite standard.
(d)the applicant has provided no explanation for how it can deliver educational services to the requisite standard to new students, when Mr Sidhu’s affidavit states that the validation of various students has been suspended due to COVID-19.
(e)while there is no doubt ongoing adverse financial impact on the applicant as a consequence of the stay conditions, it submits that in the circumstances, that impact does not outweigh the primacy of the public interest and the potential consequences that can flow to students in the event that applicant is permitted to take on new students but is not able to perform education and training for those students to the requisite standard.
(f)the Tribunal should not be satisfied that the applicant will be able to secure sufficient additional students to remain viable, as projected.
In considering this application the Tribunal had regard to the factors relevant to a stay application as enunciated in Scott v Australian Securities and Investments Commission.[1] However, consistent with previous decisions of this Tribunal[2], in considering a variation to a stay order it is not necessary to apply each of these considerations afresh. Rather the question for the Tribunal is whether the circumstances have changed to such an extent that the Tribunal, on the basis of the further information, is satisfied that the balance falls in favour of a decision to vary the stay order.
[1] [2009] AATA 798 at [4].
[2] See for example, Australian Institute of Technical Training Pty Ltd and Minister for Education and Training [2018] AATA 5392.
As indicated at the previous hearing, the Tribunal is satisfied that as a consequence of the further delay that will be required to enable new evidence to be presented and for the Tribunal to make its final decision, there is likely to be ongoing adverse financial impact on the applicant and there is a genuine risk that the applicant could become unviable and cease to trade. Not only would such an outcome have a very significant consequence for existing students, but it would also render the present proceedings nugatory.
The Tribunal is satisfied, based on the material before it, that should the stay be varied to enable new enrolments of up to a total of 350 students, such an outcome has a genuine prospect of being avoided. It accepts the applicant’s projections as reasonable, acknowledging of course that they are projections and that they therefore come with some degree of uncertainty. On the basis of the projections, the Tribunal is satisfied that the applicant will be in a position to meet its ongoing costs of operation for the foreseeable future. The Tribunal is also satisfied that the projections allow for appropriate further investment in compliance and continuous improvement, as proposed by the applicant.
Against this of course, are the potential risks to the broader public interest, referred to above, together with the potential impact on individual students, if training is offered by the applicant but not delivered to the requisite standard. This was the substantive issue in the mind of the Tribunal when the current condition preventing new enrolments was imposed. In response to this, the applicant’s affidavit materials attest to the steps that it has taken to address the concerns previously raised by the respondent and that are the subject of the substantive matter before the Tribunal.
The applicant contends that:
(a)it has taken sufficient steps to allay concerns raised by the respondent regarding its willingness and capacity to deliver training to a standard consistent with its obligations under NVR and ESOS Acts. Mr Sidhu attests to specific examples of such steps, including that the applicant has continued to use the services of an external expert consultant to advise it on compliance and continuous improvement.
(b)it has refocused its resources on delivering its hospitality and automotive qualifications and proposes to further reduce its scope of registration by removing additional qualifications, including a Diploma of International Business, a Diploma of Leadership and Management, Advanced Diploma of Leadership and Management, a Diploma of Remedial Massage, Certificate IV in Hairdressing and a Diploma of Beauty Therapy.
(c)it has continued to track compliance through its compliance management schedule and in an internal audit document.
(d)it has acquired new assessment resources for a number of its courses and is committed to purchasing further resources.
(e)it has arranged for the creator of the new tools to conduct training sessions for its trainers and assessors.
(f)it has commenced a new learning management system, Google Classrooms, and is undertaking training for trainers in the use of Google Classrooms.
(g)it has continued to implement its plagiarism and academic misconduct policy and has issued a student guide to reinforce the policy and also commenced the implementation of a new assignments platform, Google Assignments, for the submission and assessment of student assignments, which will enable the applicant to check for plagiarism automatically and more comprehensively.
(h)it has ceased employment with a number of trainers who were the subject of previous criticism by the respondent and has arranged for further training sessions in relation to one particular trainer, in relation to whom questions had been raised. The applicant’s remaining trainers have been provided further training and information sessions by the applicant’s expert consultant.
(i)it has issued a step by step summary document to assist staff in undertaking internal validation, and the applicant has also engaged a number of people to conduct external validation and reviews of completed student assessments and has completed some suggested improvements following those external assessments.
(j)it has also engaged a new operations manager with over 25 years’ experience in the VET sector.
(k)it has implemented a significantly streamlined attendance monitoring procedure, which is captured by its new monitoring attendance policy and procedures document. In addition, the applicant has appointed a dedicated staff member to be responsible for attendance monitoring across all its courses.
(l)it has updated its PRISMS system to ensure strict adherence with its obligations under the ESOS Act and the National Code, and the applicant has undertaken additional training sessions with its external consultant for staff, in relation to PRISMS reporting.
(m)it has implemented a new pre-enrolment engagement policy and procedure document that sets out the steps required to be completed before a student can be enrolled.
(n)it has also implemented a number of other revised policies and procedures in relation to complaints and appeals and issuing qualifications and statements of attainment.
The respondent rejects these contentions and continues to maintain its position that the steps that the applicant claims to have taken do not sufficiently address each of the concerns it has previously raised. The respondent continues to be of the view that the Tribunal should not have confidence that the applicant has either a willingness or capacity to be able to meet its regulatory obligations regarding the standard of training it is currently providing or is likely to provide in the future. The respondent has raised the issue of attendance monitoring compliance specifically on the basis that it was a central concern in the mind of the Tribunal when it imposed the current stay order conditions following the initial substantive hearing.
In addition, the respondent has raised further issues regarding the appropriateness of the applicant offering practical training in the present COVID-19 environment and its capacity to undertake its validation processes in the present circumstances. The applicant rejects this contention, arguing that it is seeking to offer training in accordance with the respondent’s current guidelines and its position is no different to any other training organisation endeavouring to grapple with the present challenges. The Tribunal accepts the applicant’s contention in this respect.
This is an interlocutory hearing. Ultimately, the broader issues in dispute between the parties can only be fully resolved at the conclusion of a final hearing and on the final decision of the Tribunal. While the Tribunal has had the benefit of the initial substantive hearing it has not yet formed a final view in respect of the substantive applications. It has agreed to reopen the matter and allow the parties to present new evidence. It has done so because it is persuaded that the applicant’s proposed new evidence goes to substantive matters that are relevant to the Tribunal’s final determination of this matter. The Tribunal has not had the opportunity to fully consider the new evidence at this stage. Nor has the respondent had the opportunity to fully test it. They are matters for the final hearing. However, based on the materials before it, the Tribunal is satisfied that, taken at its highest, the applicant’s case is not hopeless or completely without merit. It has some substance. Beyond that, the Tribunal makes no comment in relation to the likely outcome of the applicant’s case in this matter. In forming this preliminary view, the Tribunal is making a broad observation about the applicant’s case not being without merit or not being a hopeless case.
In these circumstances, the Tribunal is particularly concerned to avoid the prospect of the proceeding becoming nugatory due to the inability of the applicant to continue to trade for such time as will enable the Tribunal to hear the further evidence and make its final decision. The Tribunal is satisfied that this is a genuinely changed circumstance that tips the balance in favour of granting the applicant’s application to vary the conditions of the stay order to enable it to enrol new students up to a cap of 350 students. The Tribunal is satisfied that the cap at 350 students strikes the right balance in seeking to weigh the competing considerations relevant to this stay variation application.
The Tribunal is not satisfied that it would be appropriate to leave the cap to existing students or impose a cap in any other way, given the potential for this to have a significant adverse impact on the projected revenue of the applicant, which again runs the risk of the substantive proceeding being rendered nugatory. In the Tribunal’s view, the most effective way of avoiding that outcome and minimising any risks, either to new or existing students, or the broader public interest, is to pursue the expedited process for bringing this matter to a final resolution as soon as possible. The Tribunal remains committed to that outcome and acknowledges the parties’ stated commitment to do likewise.
Accordingly, the Tribunal makes the following orders:
1. The Tribunal’s Orders of 28 June 2019 be vacated; and
2. The Orders of the Tribunal of 11 May 2018 be varied in the following terms:
a. the following be added:
(g)the Applicant may:
iii.enrol a new student into a VET course or part of a VET course; and
iv.allow a VET student to begin a VET course or any part of a VET course on the condition that, at all relevant times, the number of students who have commenced a VET course or part of a VET course does not exceed 350 in number.

I certify that the preceding 22 (twenty-two) paragraphs are a true copy of the written reasons for the decision herein of The Hon. Matthew Groom, Senior Member

.........................[sgd]...................................
Associate
Dated: 4 June 2020

Date of hearing:
29 April & 7 May 2020

Advocates for the Applicant:

Solicitors for the Applicant:

Mr D. Williams QC & Mr A. Solomon-Bridge

Marshalls Dent Wilmorth Lawyers

Advocate for the Respondent:
Mr A. Ounapuu

Solicitors for the Respondent:
Australian Skills Quality Authority

Date of hearing:	29 April & 7 May 2020
Advocates for the Applicant: Solicitors for the Applicant:	Mr D. Williams QC & Mr A. Solomon-Bridge Marshalls Dent Wilmorth Lawyers
Advocate for the Respondent:	Mr A. Ounapuu
Solicitors for the Respondent:	Australian Skills Quality Authority