Australian Tertiary Academy Pty Ltd and Australian Skills Quality Authority - [2018] AATA 4875

Australian Tertiary Academy Pty Ltd and Australian Skills Quality Authority [2018] AATA 4875 (11 December 2018)
Division:GENERAL DIVISION
File Number(s): 2017/0290
Re:Australian Tertiary Academy Pty Ltd
APPLICANT

AndAustralian Skills Quality Authority
RESPONDENT

DECISION
Tribunal:Deputy President Bernard J McCabe
Date:11 December 2018
Place:Sydney

The decision to cancel the Applicant’s registration is affirmed.
...........................[SGD].............................................
Deputy President Bernard J McCabe
CATCHWORDS
VOCATIONAL EDUCATION AND TRAINING - registration cancelled - non-compliance with the standards - standard 1.8 - standard 3.1 - standard 8 - fit and proper person requirements - fraud allegations against employee - contravention of obligation to cooperate with the regulator - decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 33, 37
Crimes Act 1914 (Cth) s 37QU
National Vocational Education and Training Regulator Act 2011 (Cth) ss 2A, 3, 17, 22, 29, 33, 36, 39, 108, 200, 203, 210, 211
CASES
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27
Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd (2015) 225 CLR 352
Australian Tertiary Academy Pty Ltd and Australian Skills Quality Authority [2017] AATA 480
RBPK and Innovation and Science Australia [2018] AATA 1404
Shi v Migration Agents Registration Authority [2008] HCA 31
SECONDARY MATERIALS
Standards for Registered Training Organisations 2015
REASONS FOR DECISION
Deputy President Bernard J McCabe
11 December 2018

The Australian Tertiary Academy Pty Ltd is the applicant in these proceedings. It was a registered training organisation under Part 2 of the National Vocational Education and Training Regulator Act 2011 (the Act). On the strength of that registration, the applicant conducted a business in western Sydney which conferred qualifications on individuals working in the building trades. A number of matters came to the attention of the Australian Skills Quality Authority (ASQA) during 2015 and 2016 which raised questions about the operations of the applicant. ASQA is the National Vocational Education and Training Regulator under the Act. After a lengthy process, ASQA decided on 14 December 2016 to exercise the powers under ss 36(2)(f) and 39 of the Act to cancel the applicant’s registration. The cancellation decision took effect on 31 January 2017. The applicant has asked the Tribunal to step into the shoes of the regulator and determine whether cancellation or other administrative action is appropriate.
I am satisfied the cancellation decision should be affirmed. I explain my reasons below.
THE APPLICANT’S BUSINESS
The applicant commenced operations in October 2013. Mr Wassim Hawchar was the sole director and shareholder at all material times. Reduced to its essence, the applicant’s business involved examining each individual candidate’s background, experience and training with a view to certifying the candidate was entitled to one or more trade qualifications.
While the applicant has focused on what ASQA described as ‘assessment-only RPL [recognition of prior learning services]’ in the building trades, the applicant had ambitions to develop training and accreditation processes in other occupations. At the date of the cancellation decision, the applicant’s business was still relatively small. Apart from

Mr Hawchar, it employed few staff. It also engaged a number of contractors and consultants.
Mr Hawchar gave evidence about the way in which the applicant’s business was conducted. During the course of his examination-in-chief, he said the applicant’s goal was to offer affordable ‘recognition of prior learning’ to individuals already engaged in the building trades. He said the business focused on members of his local community in Western Sydney. Many of those individuals had come from overseas. Mr Hawchar explained he had a bad experience with a registered training organisation in his personal life; he thought he could do better: transcript at p 41. He added that he was a family man and a leader in his community and that many young people approached him for advice and assistance. He made clear he believed he was providing a community service that was badly needed: transcript at p 45.
Mr Hawchar said individuals would typically approach the applicant for a free initial assessment of their experience and prior learning. At that initial interview, a representative of the applicant would review the individual’s paperwork and other evidence and make a determination about whether that individual should be accepted for assessment.

(Mr Hawchar said during cross-examination that he conducted the initial interviews himself, although he acknowledged he was neither an assessor or trainer in the organisation: transcript at pp 110-112.) If the candidate was accepted, his or her case would be referred to one of the consultants who acted as an assessor. The assessor was required to refer to the detailed criteria applicable to each qualification that was to be conferred and use established assessment tools in the course of his or her work.

Mr Hawchar pointed out in his evidence that only around 15% of the people who came in for the free interview would be accepted for the purposes of assessment. Mr Hawchar said the vast majority of candidates did not meet the criteria for the assessment, most obviously because they were unable to obtain the necessary evidence: transcript at pp

42-43. If an assessor subsequently found the candidate was qualified, the assessor’s endorsement came back to Mr Hawchar for final sign-off. Mr Hawchar said he reviewed the assessments, even though (as I have already noted) he was not a trainer or assessor himself. (Mr Hawchar did have a Certificate IV in training and assessment but he did not complete assessments himself: transcript at pp 111-112.)
Mr Hawchar said the applicant’s business was still very small. Indeed, he made clear in cross-examination that he attended to many aspects of the business himself, and that he oversaw everything – even though he was not physically present in the applicant’s premises all day on every business day: transcript at p 103. The applicant relied on causal employees and contractors to actually undertake important aspects of its work.

The applicant also engaged reputable and experienced consultants to advise on its operation. Indeed, Mr Hawchar said the applicant spent in excess of $100,000 on external consultants: transcript at p 42. He said all of the work of the consultants – including those engaged after problems were identified by ASQA – had resulted in internal systems and procedures that were in excellent shape. He said the applicant changed consultants on several occasions in an effort to find somebody capable of satisfying ASQA, but that had proved fruitless. He said he did not know what more could be done to satisfy ASQA.

The exasperated tone with which he gave evidence underlined his obvious belief that ASQA was being unreasonable in its demands: transcript at pp 46-47.
There was a good deal of evidence at the hearing about Mr Kelvin Fong, one of the consultants engaged by the applicant at an early stage. The process by which Mr Fong was recruited was remarkably informal. Mr Hawchar explained he was speaking with a friend before the launch of the applicant’s business. The friend recommended that the applicant engage Mr Fong in light of his experience in the industry. On the strength of that referral, Mr Hawchar asked Mr Fong to come in for an interview. Mr Hawchar’s casual approach to that task was demonstrated in his answers during cross examination where he said of Mr Fong (transcript at p 43):
He comes in for the interview, I spoke to him. The guy sound [sic] like he knows what he’s doing and we gave him a role, and his role was student management assistant coordinator, and plus he was an assessor…
Mr Fong was subsequently described by Mr Hawchar as the student management system coordinator: transcript at p 98. In the course of his work, Mr Fong entered the names of students and other relevant details into the student information system. It also appears he was required to marshal the candidate’s paperwork. He also undertook some of the assessment work. Mr Hawchar initially said Mr Fong only ‘signed off’ on a small number of qualifications: transcript at p 43. When pressed during cross-examination on how many candidates Mr Fong assessed, Mr Hawchar was less certain. He said it was difficult to tell because many of the records had been destroyed because there was a practice – or perhaps a policy – of destroying some of the records after six months: transcript at pp 88-90.
In cross-examination, Mr Hawchar sought to downplay the centrality of Mr Fong’s role:

I was told he was just an assessor and undertook data entry functions. Mr Hawchar made clear he exercised close oversight over every aspect of the applicant’s small operation – although he also conceded he was not present in the office every day (transcript at p 103). Mr Hawchar’s attempts to downplay Mr Fong’s role appear disingenuous given Mr Fong’s job description (‘student management system coordinator’) and the fact he had access to the unique student identifier key that was required to issue qualifications. He also had access to the applicant’s Auskey details so he could interact with government agencies on the applicant’s behalf and register students for government funding. Given Mr Hawchar’s own inexperience in the conduct of a registered training organisation and the fact he believed Mr Fong was experienced, it seems likely Mr Hawchar relied at least to some extent on Mr Fong.
There was some dispute in the evidence over who had physical custody of the applicant’s seal. The seal was, in effect, the applicant’s signature on qualifications. Mr Hawchar explained in cross-examination that he had ordered the seal and a copy online. ASQA alleged Mr Fong had access to the seals but Mr Hawchar insisted in cross-examination that he had custody of both the seals and they were secured in his office. ASQA sought to tender some evidence ultimately provided by the Australian Federal Police (AFP) suggesting Mr Fong was discovered in possession of a seal apparently belonging to the applicant. If Mr Fong did have possession of a seal, it is unclear whether it was one of the seals in question or a facsimile Mr Fong had made himself. (I will have more to say about the admissibility of the evidence obtained from the AFP in due course.) In the absence of evidence from Mr Fong, I am not satisfied I can make a definitive finding that Mr Fong had access to a seal that Mr Hawchar insists was in his possession. While I have some hesitation in accepting Mr Hawchar’s claim that he was careful with the seal given the casual approach to hiring that allowed a wolf in the form of Mr Fong into a central role in the administration of the applicant’s hen-house, I am unable to make a definitive finding in relation to the custody of the seal.
Mr Hawchar said he subsequently learned Mr Fong had been in trouble with the law. During cross-examination, Mr Hawchar said Mr Fong approached him in 2015 after

Mr Fong commenced work to disclose the police had raided Mr Fong’s home in connection with a fraud that had been committed in Queensland while working for another organisation. Mr Hawchar said he was told Mr Fong was accused of criminal conduct in relation to the accreditation of ‘white cards’, which refers to a qualification required by some people in the building trade. Mr Hawchar said he immediately moved to terminate Mr Fong’s engagement. That is fair enough, but the evidence suggests that was the extent of Mr Hawchar’s reaction. The information about Mr Fong’s past must have been – or should have been – of serious concern to the applicant. But Mr Hawchar seemed uncertain of the nature of the allegations when questioned about them in cross-examination. His answers suggested he appreciated Mr Fong’s continued presence in the business created a reputational risk but he seemed remarkably incurious about whether Mr Fong had engaged in the same conduct or something similar while he worked for the applicant.
There is no evidence to suggest Mr Hawchar was aware of problems in Mr Fong’s background when the decision was made to take him on – but nor is there evidence that Mr Hawchar checked any of Mr Fong’s references or made other enquiries about his background. It seems Mr Hawchar was content to rely on the oral – and, I might say, remarkably informal - referral from his friend, and on his (that is, Mr Hawchar’s) own brief interaction with Mr Fong during the course of an interview. Mr Hawchar’s behaviour following Mr Fong’s departure was also remarkably sanguine. There was no suggestion in the evidence that Mr Hawchar followed up with an audit or review of Mr Fong’s work to ensure he had done his job diligently and appropriately once Mr Hawchar became aware of the problems in Mr Fong’s past. When asked about his reaction during cross-examination, he said the applicant had not retained the relevant records and the ASQA audit was already underway, so he was not sure what else could be done. That shrug of the shoulders is surprising given Mr Fong’s central role in the small operation and in light of the emphasis in the VET Quality Framework on the need to keep proper records. These lapses do not speak well of Mr Hawchar’s diligence as a senior executive. ASQA said

Mr Hawchar compounded the error by failing to report what transpired with Mr Fong to ASQA. I will have more to say about that below.
ASQA officers conducted an audit of the applicant’s operation over two days at the end of June 2015. A number of concerns were identified. Those matters were set out in an audit report. The report is extensive and detailed. It runs to 65 pages. A copy of the report is reproduced in the documents provided under s 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). That brings us to ASQA’s case against the applicant.
A BRIEF HISTORY OF THE ASQA’S CASE AGAINST THE APPLICANT
The decision-making process which led to these proceedings is recorded in the documents filed pursuant to s 37 of the AAT Act. Those documents include:
·the notice dated 14 July 2015 alerting the applicant to instances of non-compliance with the Standards for Registered Training Organisations 2015 (the Standards) that were identified in the course of the audit that was conducted at the end of June 2015. The notice invited the applicant to make submissions as to how it would rectify the identified shortcomings;
·the notice dated 18 January 2016 advising ASQA intended to cancel the applicant’s registration, or impose some lesser penalty, given the applicant was “critically non-compliant” with the Standards. The notice invited the applicant to make submissions about sanctions and explain any additional steps it had taken, or proposed taking, to address the non-compliance by 16 February 2016;
·the applicant’s response to the notice of intention to cancel. The response was communicated after business hours on 29 February 2016. (The applicant had sought and obtained an extension of time from ASQA until 29 February so it could provide a response.) The response identified rectification measures and referred to additional evidence in support of the applicant’s case.
·ASQA’s analysis of the applicant’s response and supporting material with reference to the VET Quality framework. That analysis was dated 21 March 2016. It concluded the applicant was still critically non-compliant with the Standards.
In its ‘sanction decision record’ dated 21 July 2016, ASQA decided to cancel the applicant’s registration as a registered training organisation pursuant to ss 36(2)(f) and 39 of the NVR Act. In a statement accompanying that decision, the decision-maker explained:
The RTO was found critically non-compliant at audit and the evidence reviewed indicates that the requirements of the VET Quality Framework have not been complied with and this would have a severe impact on students achieving training product skills and knowledge. The RTO’s response to the sanction notice has been assessed and it remains critically non-compliant with the VET Quality Framework and the Standards for Registered Training Organisations 2015 Clauses 1.1, 1.2, 1.3. 1.4, 1.6, 1.8, 1.13, 2.1, 4.1 and 6.5.
The applicant was informed of the cancellation decision in a letter dated 1 August 2016. On 26 August 2016, the applicant’s solicitor wrote to ASQA asking for an extension of time from 31 August to 16 September 2016 to seek internal reconsideration of the cancellation decision. That reconsideration was presumably sought pursuant to s 200 of the NVR Act. There was some delay in finalising the applicant’s submissions on the reconsideration; they were finally received on 22 September 2016. ASQA’s analysis for the purposes of the reconsideration is dated 16 November 2016. ASQA’s review of all the evidence it received concluded the applicant was still critically non-compliant with the Standards in a number of respects. In its formal reconsideration decision dated

14 December 2016, ASQA affirmed the decision under review, noting ongoing non-compliance with Standards 1.1, 1.4, 1.6, 1.8, 1.13 and 2.1. In other words, while the applicant was able to persuade ASQA that some of the findings of non-compliance had been addressed and rectified, ASQA concluded the applicant remained critically non-compliant with other Standards. On that basis, it seems, ASQA concluded the appropriate sanction was cancellation of the applicant’s registration.
I have been careful to recount the history of ASQA’s decision-making process because it illustrates how ASQA provided the applicant with ample opportunity to address and rectify compliance issues before the cancellation decision was made. The applicant had further opportunities to address these issues while the reconsideration process continued. Almost a year and a half elapsed between the time of the audit which identified the issues and the delivery of the reconsideration decision. And yet ASQA was satisfied issues remained.
The applicant asked the Tribunal to review ASQA’s reconsideration decision pursuant to

s 203 of the NVR Act. The Tribunal declined to make an order under s 41(2) of the AAT Act staying the operation and implementation of the reviewable decision while the review proceeded. Ordinarily, the fact the applicant was unable to trade would provide an impetus for the applicant, at least, to progress the application to a speedy conclusion. That did not happen. Indeed, the proceedings have a tortured history. They were marred by a number of failures to comply with directions and interlocutory skirmishes between the parties that contributed to lengthy delay and a level of rancour that made the final hearing longer and more complex than it needed to be. The experience in these proceedings undoubtedly holds lessons for the management of similar cases under this legislation in the future. In particular, the way in which this case unfolded underlines the importance of carefully considering at an early stage whether a regulator should be required to present its case first. That did not occur in these proceedings, but – for reasons that became apparent at the hearing - it should have.
At the final hearing, the applicant took the opportunity to present more evidence describing its systems, programs and personnel. Some of the evidentiary material was contained in a lengthy affidavit sworn by Mr Hawchar but fresh material was also provided at the hearing by Ms Hodge, a consultant engaged by the applicant to undertake a further review. Mr Hawchar and Ms Hodge also gave evidence. The evidence of Ms Hodge assumed particular importance.
ASQA now says, in effect, that the world has moved on since it concluded there were contraventions of the Standards. Even if I accept the applicant has at last addressed many of the instances of persistent non-compliance that prompted the reviewable decision, ASQA says other considerations have emerged that suggested I should affirm the cancellation decision. ASQA says the applicant’s tardiness in complying with its obligations under s 211 of the NVR Act is a powerful argument in favour of cancellation even if the obligation did not arise until after the original cancellation decision occurred. ASQA also relied heavily on the evidence about the role of Mr Fong and the applicant’s failure to inform ASQA when the details of Mr Fong’s history came to light. The applicant, for its part, says I should not have regard to the evidence about its compliance with s 211 or any of the other civil penalty provisions in the NVR Act and it argues much of the evidence ASQA introduced about Mr Fong should not be admitted. The applicant says all that is left is the evidence about the original contraventions of the Standards, and it argues most of the shortcomings that were identified have been (or can readily be) addressed.

In those circumstances, I was told, the applicant’s registration should be restored.
THE TRIBUNAL’S ROLE

In the course of its review, the Tribunal exercises all of the same powers – and is subject to all of the same formal constraints – as the original decision-maker. In most types of review before the General and Other Divisions of the Tribunal, the Tribunal is expected to reach the correct or preferable decision on the basis of the material available at the time of the hearing: see, generally, Shi v Migration Agents Registration Authority [2008] HCA 31. In this case, s 36(3)(b) of the NVR Act expressly authorises the decision-maker to have regard to:
·the applicant’s conduct, or
·circumstances that have arisen since the decision-maker gave the notice of its intention to impose a sanction in accordance with its natural justice obligations. (Those natural justice obligations are set out in part in s 37 of the NVR Act.)
That does not mean the conduct of the applicant and the circumstances which existed prior to the hearing will be irrelevant, of course. The Tribunal must have regard to all the relevant circumstances. Evidence suggesting an applicant has belatedly addressed persistent shortcomings must be seen in that light.
There was a good deal of confusion and conflict between the parties at the hearing over what evidence should be considered and how it should be elicited. That conflict manifested itself most obviously in repeated (and often unhelpful) objections to questions but there were also complicated arguments from both parties over the admissibility of material.
Section 33(1)(c) of the AAT Act says the Tribunal “is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate”. The rules of evidence are not wholly irrelevant; even so. As the Tribunal observed in RBPK and Innovation and Science Australia [2018] AATA 1404, the rules of evidence are the product of years of experience in obtaining and evaluating evidence in a way that is fair and effective: at [10]. The Tribunal is entitled to look to the wisdom contained in those rules for guidance on how it should proceed, but it should not lose sight of the instruction in
s 33(1)(c). There is a danger that the Tribunal will end up applying the rules of evidence by default where it does not turn its mind to how it should deal with the evidence in a particular case.
The Tribunal needs probative evidence that is relevant to the questions posed by the statute. It must make sure the evidence is gathered, tendered and tested in accordance with the rules of procedural fairness. The parties are generally expected to take the initiative in gathering the material, albeit they can make use of the Tribunal’s powers – most obviously the summons power – to that end. Ultimately, though, the Tribunal is expected to form a view on what evidence it requires and it should give the parties an appropriate (but not unlimited) opportunity to provide the evidence and comment upon it in the course of the hearing process. (The High Court’s reasoning in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 is useful when determining what will amount to an appropriate opportunity to participate, while the model litigant rules and the decision-maker’s statutory duty to assist the Tribunal might require the decision-maker to assume an extra burden in the fact gathering process in some cases: see s 33(1AA) of the AAT Act.)
It follows I must identify the question or questions posed by the statute. Those questions must be distilled from the text of the NVR Act. Before I do that, I should say something about the regulatory regime in the NVR Act.
THE STRUCTURE AND OPERATION OF THE REGULATORY REGIME
The objectives of the NVR Act are identified in s 2A as follows:
(a)to provide for national consistency in the regulation of vocational education and training ( VET ); and
(b)to regulate VET using:
(i)     a standards-based quality framework; and
(ii)    risk assessments, where appropriate; and
(c)to protect and enhance:
(i)     quality, flexibility and innovation in VET; and
(ii)    Australia's reputation for VET nationally and internationally; and
(d)to provide a regulatory framework that encourages and promotes a VET system that is appropriate to meet Australia's social and economic needs for a highly educated and skilled population; and
(e)to protect students undertaking, or proposing to undertake, Australian VET by ensuring the provision of quality VET; and
(f)to facilitate access to accurate information relating to the quality of VET.
With those objectives in mind, the NVR Act adopts several regulatory strategies. It includes a number of provisions that impose obligations which are regarded as so serious that they are backed by criminal sanctions. One of those criminal provisions is s 211, which gives teeth to the requirement that an RTO deliver up ‘VET Student records’ to ASQA within 30 days of its registration being cancelled. Contraventions of some other provisions in the NVR Act result in civil penalties. Most of those provisions are set out in Part 6 of the NVR Act, including s 108 which provides for the imposition of a civil penalty if the RTO issues a qualification to a student in circumstances where the RTO has not satisfied itself the student had successfully satisfied the requirements of the qualification.
It should be said that ASQA has not charged the applicant with any offence or commenced proceedings under a civil penalty provision. But ASQA says there have been contraventions of a number of provisions all the same. I will have more to say about those allegations in due course.
The principal regulatory tool in the NVR Act is the registration regime in Part 2. Section 17 says an organisation can be registered as an RTO provided that (amongst other things) it complies with the VET Quality Framework and conditions referred to in ss 22-28, and any additional conditions imposed pursuant to s 29. The registration is not open-ended: an RTO is registered in respect of particular VET courses. If it wishes to change the courses it offers, it must apply to change the scope of its registration pursuant to s 33 of the NVR Act.
I should pause to explain what is meant by the expression ‘VET Quality Framework’. The concept is central to the regulatory regime. It is defined in s 3 to include a range of measures and standards including the following:
(a)the Standards for NVR Registered Training Organisations;
(aa)the Quality Standards;
(b)the Australian Qualifications Framework;
(c)the Fit and Proper Person Requirements;
(d)the Financial Viability Risk Assessment Requirements;
(e)the Data Provision Requirements.
Clauses (a) and (c) are particularly relevant for the purposes of these proceedings. The current version of the Standards for Registered Training Organisations (the Standards) referred to in clause (a) was issued in 2015. The Standards are both prescriptive and aspirational. Each individual Standard is accompanied by detailed clauses setting out requirements and expectations. The Standards are:
·Standard 1. The RTO’s training and assessment strategies and practices are responsive to industry and learner needs and meet the requirements of training packages and VET accredited courses. This Standard is comprised of 27 individual clauses dealing with aspects of training and assessment. Clauses 1.8-1.12 deal with conducting effective assessment.
·Standard 2. The operations of the RTO are quality assured. Clauses 2.1 and 2.3-2.4 deal with regulatory compliance and governance practice and clause 2.2 deals with training and assessment issues.
·Standard 3. The RTO issues, maintains and accepts AQF certification documentation in accordance with these Standards and provides access to learner records. Clauses 3.1-3.4 deal with certification; clause 3.1, which says the provider should only issue certification to somebody whom it has assessed as meeting the qualifications, assumed some importance at the hearing – although I note ASQA’s reviewable decision did not find a contravention of this Standard. Clauses 3.5 deals with enrolment while clause 3.6 deals with student identification issues.
·Standard 4. Accurate and accessible information about an RTO, its services and performance is available to inform prospective and current learners and clients. Clause 4.1 of this Standard addresses marketing and recruitment issues, with particular emphasis on the provision of accurate information to prospective and current students.
·Standard 5. Each learner is properly informed and protected. Clauses 5.1-5.3 deal directly with the need to provide accurate information and advice to learners while clause 5.4 is one of a suite of consumer protection measures to protect the learner and keep them informed of relevant changes.
·Standard 6. Complaints and appeals are recorded, acknowledged and dealt with fairly, efficiently and effectively. Clauses 6.1-6.6 deal with various aspects of the complaints procedure, including requests for review.
·Standard 7. The RTO has effective governance and administration arrangements in place. Clauses 7.1-7.2 and 7.4-7.5 address regulatory compliance and governance practice while clause 7.3 deals with protecting pre-paid fees by students.
·Standard 8. The RTO cooperates with the VET Regulator and is legally compliant at all times. Clauses 8.1-8.2 deal in particular with the obligation to cooperate, clause 8.3 requires the provider to notify ASQA of any agreement (or change to an agreement) for a third party to provide services, clause 8.4 requires a declaration of compliance to be made each year and clauses 8.5-8.6 impose a catch-all obligation to comply with all relevant laws and regulatory requirements and ensure staff are informed about any changes to those requirements.
Standards 1.8 and 8 assume particular importance given the way in which the proceedings unfolded.
The Fit and Proper Person Requirements (referred to in s 3(c) of the NVR Act) are found in Schedule 3 to the Standards. The requirements say ASQA must have regard to a range of considerations when determining whether a person (such as the applicant or one of its officers) was fit and proper. Amongst other concerns, ASQA should have regard to whether the person has a criminal record or was involved in the management of another RTO that had its registration cancelled for breaching a condition of that registration.[1]
[1]The full text of the Requirements in Schedule 3 reads:
Criteria for suitability
In assessing whether a person meets the Fit and Proper Person Requirements, the VET Regulator will have regard to the following considerations:
a)whether the person has been convicted of an offence against a law of the Commonwealth or a State or Territory of Australia, or of another country, and if so, the seriousness of the offence and the time elapsed since the conviction was recorded;
b)whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO had its registration on the National Register cancelled or suspended by its VET Regulator for having breached a condition imposed on its Registration;
c)whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO was determined to have breached a condition of its registration under the Education Services for Overseas Students Act 2000 or the Tertiary Education Quality and Standards Agency Act 2011;
d)whether the person has ever become bankrupt, applied to take the benefit of a law for the benefit of bankrupt or insolvent debtors, compounded with his or her creditors or assigned his or her remuneration for the benefit of creditors, and if so, the time elapsed since this event occurred;
e)whether the person has ever been disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001, and if so, whether the disqualification remains in place;
f)whether the person was involved in the business of delivering courses or other services on behalf of a person that was the subject of regulatory action described in points b) or c) above, and if so, the relevance of the person’s involvement;
g)whether the person has ever provided a VET Regulator with false or misleading information or made a false or misleading statement to a VET Regulator, and if so, whether it is reasonable to assume that the person knew that the statement made or information provided to the VET Regulator was false or misleading;
h)whether the person has ever been determined not to be a fit and proper person as prescribed under any law of the Commonwealth or of a State or Territory of Australia, and if so, whether that determination remains in place;
i)      whether the public is likely to have confidence in the person's suitability to be involved in an organisation that provides, assesses or issues nationally recognised qualifications;
j)      whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO was determined to have breached a government training contract; and
k)   any other relevant matter.
Section 22 says complying with the VET Quality Framework is a condition of registration. Section 23 says registration is also conditional upon the applicant complying with the Fit and Proper Person Requirements that are included in the Standards. That is interesting given s 3 defines the ‘VET Quality Framework’ to include the Fit and Proper Person Requirements – so that one might otherwise assume complying with the Fit and Proper Requirements was adequately addressed by s 22. The condition imposed under s 25 is also relevant here. That section says registration is conditional upon the RTO informing ASQA of ‘material changes’ during the life of the registration. The section provides:
1An NVR registered training organisation must notify the National VET Regulator, in writing, if:
(a)an event occurs that would significantly affect the organisation's ability to comply with the VET Quality Framework; or
(b)the name or contact details of an executive officer or high managerial agent of the organisation change; or
(c)there are other substantial changes to the operations of the organisation.
2The notice must be given to the National VET Regulator as soon as practicable after the NVR registered training organisation becomes aware of a matter mentioned in subsection (1)
Part 2, Division 3 identifies the regulatory tools available to ensure compliance with the registration regime. Those tools include the power to conduct audits and issue binding directions to rectify a breach in conditions, and a range of administrative sanctions referred to in Subdivision B. Section 36(1) in Subdivision B says the decision-maker can impose one or more of the sanctions referred to in s 36(2) “if it is satisfied it is appropriate….”. Cancellation of registration is one of the sanctions referred to in s 36(2); the power to cancel is actually found in s 39. Section 39(1) provides the decision-maker “may, by notice in writing, cancel an NVR registered training organisation's registration in any circumstances that [ASQA] considers it appropriate to do so…” [emphasis added].
The discretion to cancel appears to be open-ended, but of course it is not. The cancellation power must be exercised for the purposes of the Act and in the context of the regulatory regime.
It stands to reason that the sanctions referred to in s 36 must be exercised in a way that promotes compliance with the VET Quality Framework and the other conditions of registration. While the focus is presumably on securing the compliance of a particular applicant, ASQA is entitled to look beyond the effect of its decision on the RTO in question. ASQA is also concerned with the need to promote compliance by other RTO’s who might be influenced by how ASQA deals with a particular RTO.
The power to cancel registration in s 39 is surely available where the decision-maker has reason to believe an RTO is unlikely to substantially comply with the regulatory regime within a reasonable time frame, and to thereafter remain in substantial compliance. If one of the other administrative sanctions referred to in s 36 would be adequate to bring about ongoing compliance, then presumably the decision-maker should resort to those measures first.
Neither the original decision nor the reconsideration decision expressly identified why cancellation was the appropriate course in light of the findings as to the applicant’s failure to comply with the Standards. There is a hint in the analysis documents prepared in support of those decisions as to ASQA’s thinking processes. Both documents refer to ‘critical non-compliance’. The use of the word ‘critical’ tends to suggest the compliance failures were regarded as being so extensive, persistent and serious that there was reason to doubt the applicant would become and remain compliant. But that was not spelled out.
This omission in ASQA’s reasoning goes some way towards explaining the disagreements about evidence that subsequently arose. By simply detailing instances of non-compliance with the Standards and asserting that cancellation was the appropriate remedy, ASQA invited an ongoing data dispute with the applicant. ASQA’s assessment became a moving feast in which dishes perpetually came and went. The applicant was still providing fresh evidence and analysis as the hearing unfolded. ASQA should have done a better job of articulating what it was about the circumstances it identified that suggested cancellation – or some other sanction – was appropriate. It is not enough to simply identify instances of non-compliance as if the fact of non-compliance speaks for itself.
ASQA’s case became clearer when it filed its statement of facts, issues and contentions. By the time of the final hearing, ASQA came to rely upon at least three sets of circumstances which it said justified a cancellation decision. The first was the information provided in the audit reports and set out in the reconsideration decision and associated documents which detailed specific instances of non-compliance with the Standards. The second was the evidence about Mr Fong and the applicant’s failure to report its experience with him to ASQA. The circumstances surrounding Mr Fong’s engagement and dismissal raise questions about the applicant’s ability to satisfy the Fit and Proper Person requirements and the requirement that the applicant report certain matters to ASQA. The third was the applicant’s failure to comply with its obligation under s 211 of the NVR Act to turn over appropriate enrolment information in a timely way once its registration was cancelled. ASQA said that last issue went to the Fit and Proper Person requirement as well, although its statement of facts, issues and contentions said (at [152]-[153]) the conduct also invited the conclusion the applicant failed to cooperate with the regulator in contravention of Standard 8. As I have already noted, Standard 8 requires that the applicant cooperate with the regulator and remain legally compliant at all times.

(The applicant said the delay was explicable and should not be held against the applicant in any event.)
There was a good deal of skirmishing between the parties over other matters that do not assist me in my task. Mr Mack, counsel for the applicant, observed in his written submissions that there was (at least potentially) a ‘vast’ range of issues raised by the parties during the course of the proceedings. As it happens, many of those issues fall away once the questions required under the statute are identified with greater clarity.

The way in which the dispute was conducted certainly made my task harder. Each of the parties criticised the way the other presented and proved its case. The atmosphere in the hearing room was contentious and chaotic.
The applicant’s compliance with the Standards

I turn to the evidence. I should say two things at the outset. First, I must take into account that the applicant had ceased trading some time before the hearing occurred. When considering the evidence about its compliance with the Standards, it was necessary to consider whether the applicant could reasonably be expected to comply if it were to resume trading. That is, to some extent, a hypothetical question. Second, I should not focus simply on whether the applicant ultimately became compliant, or is now capable of achieving compliance. The extent of the original non-compliance and what was involved in reaching a point where its operations passed muster was also relevant. The applicant had ample opportunity to address any identified shortcomings long before the hearing. Belated compliance or compliance under compulsion does not necessarily assist the applicant.
The evidence included a large number of documents. Some of them were included in the material provided under s 37 of the AAT Act, including the evidentiary analysis that accompanied the original decision and the reconsideration decision. I was also provided with an affidavit sworn on 11 August 2017 by Ms Nadine Khoury, ASQA’s Principal Regulatory Operations Officer. That affidavit included three volumes of material that was used in the preparation of a compliance monitoring report that Ms Khoury compiled for the purpose of the proceedings. That report was annexed to the affidavit. The report was also dated 11 August 2017.

The compliance monitoring report makes for interesting reading. It is, on its face, very thorough. It begins with a brief explanation of the methodology Ms Khoury adopted in conducting her review of over 2000 pages of student records that were provided by the applicant in May 2017. The sampled files were, she believed, sufficiently randomised but still representative of the range of qualifications issued by the applicant. She said she analysed the sampled files with a view to assessing them against the Standards, with particular reference to Standard 1.8. During the course of her cross-examination, she clarified that she focused on:

·Standard 1.8, which requires that the RTO implement “an assessment system that ensures that assessment (including recognition of prior learning):
(a)complies with the assessment requirements of the relevant training package or VET accredited course; and
(b)is conducted in accordance with the Principles of Assessment contained in Table 1.8-1 and the Rules of Evidence contained in Table 1.8-2”; [2]

·Standard 3.1, which provided the RTO may issue “AQF certification documentation only to a learner whom it has assessed as meeting the requirements of the training product as specified in the relevant training package or VET accredited course”; and
·Section 108 of the NVR Act, a civil penalty provision targeting the issue of a VET qualification without ensuring the student satisfied the requirements.
[2] Table 1.8-1: Principles of Assessment

Fairness

The individual learner’s needs are considered in the assessment process.

Where appropriate, reasonable adjustments are applied by the RTO to take into account the individual learner’s needs.

The RTO informs the learner about the assessment process, and provides the learner with the opportunity to challenge the result of the assessment and be reassessed if necessary.

Flexibility

Assessment is flexible to the individual learner by:

       reflecting the learner’s needs;

       assessing competencies held by the learner no matter how or where they have been acquired; and

       drawing from a range of assessment methods and using those that are appropriate to the context, the unit of competency and associated assessment requirements, and the individual.

Validity

Any assessment decision of the RTO is justified, based on the evidence of performance of the individual learner.

Validity requires:

       assessment against the unit/s of competency and the associated assessment requirements covers the broad range of skills and knowledge that are essential to competent performance;

       assessment of knowledge and skills is integrated with their practical application;

       assessment to be based on evidence that demonstrates that a learner could demonstrate these skills and knowledge in other similar situations; and

       judgement of competence is based on evidence of learner performance that is aligned to the unit/s of competency and associated assessment requirements.

Reliability

Evidence presented for assessment is consistently interpreted and assessment results are comparable irrespective of the assessor conducting the assessment.

Table 1.8-2: Rules of Evidence

Validity

The assessor is assured that the learner has the skills, knowledge and attributes as described in the module or unit of competency and associated assessment requirements.

Sufficiency

The assessor is assured that the quality, quantity and relevance of the assessment evidence enables a judgement to be made of a learner’s competency.

Authenticity

The assessor is assured that the evidence presented for assessment is the learner’s own work.

Currency

The assessor is assured that the assessment evidence demonstrates current competency. This requires the assessment evidence to be from the present or the very recent past.

Ms Khoury provided detailed notes in relation to each of the 18 sampled files. In each case, she concluded the records disclosed serious shortcomings. She opined that the applicant failed to satisfy Standards 1.8 and 3.1 in every one of the sampled files. (I note ASQA did not find the applicant had failed to comply with Standard 3.1 when it made the reviewable decision.) She also concluded the applicant had not complied with its obligation under s 211 of the NVR Act. I will have more to say about that in due course.
Ms Khoury gave evidence at the hearing. She was cross-examined on her affidavit evidence but she also gave evidence in a concurrent session with the applicant’s consultant, Ms Jacqui Hodge. Mr Mack, counsel for the applicant, suggested during cross-examination that Ms Khoury was not well placed to provide an independent report.

Mr Mack made submissions to that effect in his written submissions. While I acknowledge Ms Khoury’s central role within ASQA means she is not giving her evidence at arms’ length from the regulator, her performance during cross-examination – particularly her answers given during the course of the concurrent evidence – suggest to me she was a balanced and careful witness who had diligently done her job.
Ms Khoury’s careful analysis provides a response to and a comment upon the material that was provided in an affidavit filed by Mr Hawchar dated 30 May 2017. The evidence provided by Mr Hawchar was intended to demonstrate the applicant was (or had become, or was close to becoming) compliant with its obligations. The evidence did not do that. Perhaps the best illustration of the shortcomings in the evidence came from the applicant’s own consultant, Ms Hodge. Ms Hodge had been engaged in June 2016 to deal with the matters raised by ASQA after the applicant parted company with two firms of consultants it had used when it set up its operations: exhibit A10, affidavit dated

26 September 2017 at [17]. Ms Hodge explained in the opening paragraphs of the affidavit dated 26 September 2017 that she had been present on the second day of the hearing. She said she was there to assist the applicant in light of her familiarity with the material that was assembled in response to ASQA’s concerns. She said she realised after reading Mr Hawchar’s affidavit - and perhaps after seeing the way the hearing was progressing - that Mr Hawchar had not provided some of the relevant material to the Tribunal which, to her knowledge, might be of assistance.
Mr Cox objected to the introduction of this material because it took ASQA by surprise.

I acknowledge that evidence arrived late in the day but I allowed ASQA time so

Ms Khoury, its own expert, could review the material and comment when the hearing resumed on 5 October 2017.
Ms Hodge’s affidavit included a colour-coded chart which was intended to highlight the progress made towards achieving compliance in the period between the initial audit and the reconsideration report. On its face, the colour-coded chart did suggest a number of the issues had been resolved over time. Ms Hodge noted that she took a different view of the six areas of non-compliance that ASQA found were still an issue following the reconsideration report. Ms Hodge said that, in substance, the applicant was potentially not complying with only three of the Standards, rather than six, since a number of the Standards effectively covered the same ground. I acknowledge the Standards are drafted in such a way that there is potentially a degree of overlap between some of the individual Standards.
When she gave evidence, Ms Hodge was asked about some of the additional material that was set out in her affidavit which had not previously been provided to ASQA. That material included ‘mapping guides’ that identified the requirements of particular units, a marking guide and documents describing assessment tasks that addressed those requirements. Ms Hodge said that material provided an answer to criticisms that had been made in ASQA’s evidence analysis document which said the applicant had failed to comply with Standard 1.8 in particular. Ms Hodge’s answer to a question asked in cross-examination about the documents pertaining to one unit illustrate the thrust of her evidence, the complexity of the task required under the Standards and the challenge of assessing compliance. At pp 33-34 of the transcript for 5 October 2017, Ms Hodge explained why the documents she identified were significant:
The marking guide lists all the assessment tasks which we’ve just seen in the mapping, so assessment charts 1, 2 ,3 and 4. It provides some advice to the assessor about where and how and conditions of assessment, the rules, the assessment process that is to be conducted. It then lists the task that the student is to undertake and which is – and it matches a tool that the student has, so the student has an assessment tool that they are – and the tasks are exactly the same and then within it, in red text is the response that an assessor would be looking for from the student in order to be able to mark it as competent. It should be read with another document…which is the….sheet that says “Have all the tasks been done?” and it sits within – it’s an assessment record tool so they sit together so that the assessor can be assured that in the end that all the tasks have been done and that a task match – what was required….
Ms Hodge said she formed the view that the additional material she identified was an effective answer to ASQA’s concerns in relation to Clause 1.8 of the Standards – and that some of the material may have been available (even if it was not provided) at the time of the reconsideration decision. Ms Hodge added that she identified a few instances where she regarded the material as being inadequate and she recommended to

Mr Hawchar that changes be made: transcript at p 34.
While some of the disagreement over compliance resulted from the fact ASQA did not have access to the same material, Ms Hodge made clear she took a different view of some of the evidence that ASQA had seen and found to be inadequate. She offered the example of Ms Khoury’s criticism of one of the assessment tools. Ms Hodge said

Ms Khoury had not considered all of the relevant documents and viewed the tool in that context. That meant Ms Khoury did not consider all of the things the student was required to do in order to complete the assessment. Of course, to the extent that is a valid criticism of Ms Khouy’s evidence, it may be explicable by the applicant’s failure to identify or explain the material during the course of the audit or the process that followed.
Ms Khoury gave evidence next. After swearing to her statement, she was cross-examined. I have already noted Mr Mack asked questions designed to demonstrate that she was not an independent expert.
Ms Hodge remained in the hearing room while Ms Khoury gave evidence and each of those witnesses was invited to comment on the evidence offered by the other in a concurrent session. A consensus emerged during the course of that exchange with respect to some of the issues. For example, there was a level of agreement about the criticism that had been levelled at the adequacy of the assessment tools and documents describing the assessment processes. While the parties agreed there could be further improvement in those tools and procedures, there was also an acceptance that the way in which those tools were used in practice might be important – and it was practically impossible to reach a concluded view in relation to some of the tools while the applicant was not trading: 5 October 2017 transcript at pp 53-54. One needed to know how the tools were used in practice. Ms Khoury pointed out her concession on this issue did not extend to all of the tools which had been tested and, in her view, found wanting. Ms Hodge acknowledged she was not in a position to comment on all the tools Ms Khoury had examined because they had not been provided to Ms Hodge: 5 October 2017 transcript at p 54. Ms Khoury, for her part, agreed she had not been shown all of the assessor guidance, mapping and some other ancillary documentation that was provided with the assessment tools. She conceded those documents might have given her a fuller picture:

5 October 2017 transcript at p 55.
The two witnesses continued to disagree about the adequacy of some of the assessment tasks. In essence, Ms Khoury argued it was unclear from the mapping and other documents in the particular training packages whether the assessment tasks were appropriately aligned with the requirements of the training package. She said it was unclear whether the candidates were required to provide sufficient evidence that established they met all of the requirements: 5 October 2017 transcript at pp 56-57.

The witnesses focused on a package that led to a certification of a capacity to undertake project management. Ms Khoury explained (5 October 2017 transcript at pp 58-59):
We did disagree about the interpretation of what that skill means and the level of evidence that would be required to satisfy that a candidate has that particular skill, and of particular concern to me is the fact that the type of evidence required or just as the screenshot of a file structure, which is my understanding of what the particular part of the task which really is meant to address this specific component doesn’t really go any way to demonstrating the ability of a candidate to actually establish a project management system. So we didn’t agree on that.
When pressed on what more she would expect in order to be satisfied the assessment tasks conformed to the relevant Standard, Ms Khoury insisted (5 October 2017 transcript at p 60) it was not for her to explain how the assessments should be structured or aligned with the relevant skill. That was a matter for the RTO, she said, and there were a variety of ways in which that could be done. Ms Hodge took a more flexible view. Ms Hodge said using screen shots and the provision of more limited documentary evidence might be sufficient to demonstrate attainment of skills in project management, especially in small organisations where less sophisticated projects and project management processes were the norm: 5 October 2017 transcript at pp 60-61. Ms Hodge went on to concede there might be some improvement in the marking guide which was used by the assessor.
Ms Khoury conceded further “tweaking” of instructions provided to assessors on some tasks might be all that was required to achieve compliance with respect to another unit:

5 October 2017 transcript at p 61.
The parties effectively argued themselves to a standstill as they slogged through the minutiae of what had become a laborious data dispute. The evidence as to the applicant’s compliance with Standards was ultimately in an uncertain state. ASQA persisted in its view that the applicant was not compliant with the Standards in important respects – most obviously, in respect of Standards 1.8 and 3.1. It continued to rely on the evidence of

Ms Khoury, its principal witness, even as she conceded there was additional information made available that addressed a number of the earlier concerns. But Mr Cox’s final submissions made clear ASQA now placed less emphasis on all that evidence than it did on other shortcomings in the applicant’s operation.
The applicant, for its part, acknowledged it had made mistakes in what was essentially a new operation. Mr Mack conceded in his submissions that there were genuine issues identified in the audit and, I infer, in the reviewable decision. I was told the applicant had taken steps to rectify those issues. I was also told how the applicant had now (belatedly,

I would interpolate) provided information that demonstrated things were not as bad as ASQA thought. I was told the applicant was substantially compliant by the time of the hearing, or that it was able to become compliant once it resumed trading.
The applicant relied in particular on the evidence of its expert, Ms Hodge, to fill in the frustrating gaps in Mr Hawchar’s evidence. It is a matter of real concern that the information Ms Hodge was able to provide was not made available or properly explained until after the hearing commenced, notwithstanding the fact the lengthy process that had almost run its course.
I am satisfied there was credible evidence available to ASQA that supported its finding that the applicant was not complying in 2016 with Standard 1.8 in particular (which dealt with the adequacy of assessment processes). I am also satisfied from Ms Khoury’s analysis there was evidence of non-compliance with Standard 3.1 which suggests qualifications were being awarded to individuals who had not met the relevant assessment requirements. (That finding is, to some extent, a derivative finding: if the assessment processes were not up to scratch, qualifications issued on the strength of those assessment processes may be suspect.) In the circumstances of this case, the more significant finding is in relation to Standard 1.8. By the time of the beginning of the hearing, the applicant had already had many, many months to address those shortcomings or provide evidence that it was, in fact compliant. It was not until the last minute intervention of Ms Hodge that there was a more coherent explanation of the state of the applicant’s compliance. At its highest, Ms Hodge’s evidence suggests the applicant’s non-compliance with the Standards may not have been as serious and extensive as ASQA thought, and that some other examples of non-compliance had been or could be readily addressed with the assistance of a competent consultant like

Ms Hodge.
It may be that the evidence of Ms Hodge would have persuaded Ms Khoury that the applicant’s operation was not beyond redemption if that evidence (and the constructive attitude evinced by Ms Hodge in her testimony) had been apparent when the reconsideration decision was made. But I am not required to decide whether ASQA’s decision was right when it was made. While I step into the shoes of the decision-maker and exercise the same powers and operate under the same constraints, I have to make the correct or preferable decision on the basis of the material before me at the hearing. That material changed substantially, and continued to change as Ms Hodge gave evidence. Perhaps the best measure of the impact of Ms Hodge’s evidence at the hearing was apparent in ASQA’s closing submissions. While ASQA did not abandon its claim that the applicant was seriously non-complaint with the Standards (most obviously Standard 1.8), it chose to emphasise other matters. If the applicant’s case had changed, so had ASQA’s.

While I am satisfied from Ms Khoury’s evidence that the applicant was not compliant with Standard 1.8 in particular at the time of the reviewable decision, I am satisfied from the evidence of Ms Hodge at the hearing that the applicant’s non-compliance with that Standard was, by the time of the hearing, less clear-cut, less significant and less extensive than it appeared to ASQA at the time of the reviewable decision.
My analysis of the extent of the applicant’s compliance over time is complicated enormously by the fact the applicant was no longer trading, and had not been trading for a significant period by the time of the hearing. While I accept the outcome of that analysis has practical consequences for the applicant, assessing the quality and extent of that compliance when the applicant is not trading becomes an increasingly artificial exercise. Ultimately, I am persuaded by the evidence of Ms Hodge that any remaining instances of non-compliance might be readily addressed if the applicant were to resume operations. That finding turns crucially on the assumption the applicant would continue to retain and work with experienced, reputable external consultants given the applicant clearly does not have the expertise required within its existing organisation. If the applicant were to resume trading, it would be necessary for it to undertake a comprehensive review of all its policies and procedures to ensure they remain or become compliant. That is no small task.
The qualified nature of that finding as to the applicant’s capacity is a product of my underlying concerns over the applicant’s commitment to operating an organisation that complies with the regulatory regime. It is one thing to say it could, if it wished, become and remain compliant if it embraced certain measures; it is another to be confident that the applicant is prepared to do so. That brings me to the other evidence discussed at the hearing.
Mr Fong
I have already described the remarkably casual process that led to Mr Fong’s engagement in the organisation in 2014 and how he was dismissed by Mr Hawchar in September 2016 following disclosure of the fraud allegations against him. Mr Mack says the applicant acted reasonably: as soon as it became aware of a problem with Mr Fong, it acted promptly to terminate his relationship with the company. The applicant says there is nothing to all this.
ASQA disagrees. Even if the applicant promptly terminated the relationship with Mr Fong once the allegations against him were disclosed – and I accept the uncontradicted evidence of Mr Hawchar points to that conclusion – ASQA says the applicant should have disclosed details of the incident in accordance with the condition imposed under s 25 of the NVR Act. ASQA says the circumstances of the applicant’s interaction with Mr Fong also go to its compliance with the Fit and Proper Person Requirements in the VET Quality Framework.
I will deal firstly with the contention about s 25(1) of the NVR Act. That section requires the applicant to inform the regulator as soon as practicable after it becomes aware of:
(a)an event […] that would significantly affect the organisation's ability to comply with the VET Quality Framework; or
(b)the name or contact details of an executive officer or high managerial agent of the organisation change; or
(c)there are other substantial changes to the operations of the organisation.
Mr Hawchar said in his evidence that he did not think the business with Mr Fong answered the description of reportable events in s 25 – although there is no suggestion

Mr Hawchar turned his mind to the issue at the time. It seems it did not occur to him to report the fact of Mr Fong’s termination to ASQA.
ASQA pointed out Mr Fong had access to the unique student identifier key that was necessary for the purposes of issuing qualifications – and which could have been misused. He also had access to the Auskey system which was necessary for the purposes of obtaining government funding. ASQA also pointed out Mr Fong played a central role in the administration of the small organisation, and that he was an assessor. But does that amount to being, for example, a ‘high managerial agent’ of the organisation? That expression is defined in s 3 of the NVR Act in the following terms:
an employee or agent of the organisation with duties of such responsibility that his or her conduct may fairly be assumed to represent the organisation in relation to the business of providing courses.
Mr Hawchar certainly answers that description. He was its chief executive and he claimed he was across every aspect of the small organisation’s operations. What of Mr Fong?

The fact he had access to the Auskey system which permitted him to interact with government agencies on the applicant’s behalf tends to indicate he was, at least for some purposes, a ‘managerial agent’. But it is unlikely he was a ‘high managerial agent’. ASQA argued that, in any event, Mr Fong qualified as an executive officer of the organisation given he was:
a person, by whatever name called and whether or not a director of the organisation, who is concerned in, or takes part in, the management of the organisation…
That definition is the first limb of the definition of executive officer in s 3. I note that the other limbs of the definition refer to individuals with a substantial role or an effective say over the management of the organisation like directors or substantial shareholders or external controllers. The nature of those roles rather suggests that the reference to an individual taking part in ‘the management of the organisation’ should be distinguished from an individual who has administrative functions in one aspect of the applicant’s operations, even if those administrative functions are important to the operation of the company.
It is possible that interpretation is all too generous to the applicant given the objectives of the NVR Act. But even if I allow for a more expansive interpretation, I am not persuaded the evidence of Mr Fong’s role rises to the point he would answer the definition in s 3 notwithstanding the centrality of his role. It follows I am not satisfied there has been a technical breach of the condition imposed pursuant to s 25. In any event, I do not think

Mr Fong’s relationship with the business is, in and of itself, especially problematical for the applicant’s case at this point. Whatever the circumstances in which he came to be hired, and whatever he might have done while he worked in the company, Mr Fong has long since been despatched. There is no suggestion of an ongoing role if the business resumed.
The bigger issue is the way in which Mr Fong was recruited and supervised by

Mr Hawchar, and Mr Hawchar’s inaction in the wake of Mr Fong’s departure. While I am not satisfied there was a contravention of s 25, there is no evidence to suggest

Mr Hawchar actively turned his mind to the obligation to report, or that he was even aware of its existence. That is worrying.
Mr Hawchar’s conduct as the chief executive officer leaves much to be desired in relation to Mr Fong. While I accept the applicant’s operations were still at an early stage,

Mr Hawchar’s inexperience in conducting a business of this kind, his personal style – evidenced by his impulsive hire of Mr Fong – and his inaction following Mr Fong’s disclosures reflects poorly on Mr Hawchar’s diligence and commitment to detailed and faithful compliance with the regulatory regime.
The applicant’s compliance with s 211 of the NVR Act
The obligation to produce students records to ASQA pursuant to s 211 is imposed on an executive officer or high managerial agent of the RTO that has possession or custody of those records. The obligation does not arise until after ASQA has made a decision to deregister the applicant. In this case, it is clear the obligation imposed under s 211 fell on Mr Hawchar and he was required to produce the records to ASQA by 3 March 2017. The failure to produce those documents by that date was not considered at the time of the reconsideration decision, obviously – but can the Tribunal have regard to the failure to produce the documents in the course of its deliberations?
The history of the non-compliance with the obligation in s 211 was recorded in my reasons for decision in the interlocutory application (Australian Tertiary Academy Pty Ltd and Australian Skills Quality Authority [2017] AATA 480). The interlocutory application for dismissal was brought on the basis that the applicant could not possibly succeed at the substantive hearing because the failure to produce records in accord with the obligation imposed in s 211 was so egregious and spoke so damningly of Mr Hawchar’s shortcomings as a key manager, and pointed to serious shortcomings in the applicant’s record-keeping processes. In my reasons, I opted for a more cautious approach.

I acknowledged the evidence of the failure to produce the records and defined the sort of material that I would expect to be produced. But I concluded it would not be appropriate to simply dismiss the application at that point because it was possible the applicant might produce evidence that would explain or offset the serious questions raised by

Mr Hawchar’s failure up until that point.
I had already been provided with affidavit evidence confirming Mr Hawchar had not complied with the obligation under s 211 at the time of the interlocutory hearing and the issue of my reasons in April 2017. The applicant has not provided me with any fresh evidence that called that conclusion into doubt. ASQA pointed out Mr Hawchar and the applicant delayed a further 43 days after the date of my interlocutory reasons before producing records. The applicant finally supplied the missing records on 24 May 2017. ASQA says it subsequently became aware of additional students whose records were not included in the tranche supplied on 24 May 2017. It wrote to the applicant about these records in July 2017. These further records were delivered to ASQA on 3 August 2017 without, as ASQA notes in its written submissions, any excuse or explanation for this omission.
The applicant claims its initial failure to supply the documents was because it misunderstood its obligation in circumstances where the cancellation decision was the subject of review proceedings. That explanation is difficult to credit: the obligation in s 211 is clear enough. There could be little doubt what was required in the circumstances. But even if I accepted that excuse, the applicant could be under no illusion as to the extent and immediacy of its obligation once the reasons were handed down in the interlocutory decision. Even then, the delay persisted. If the applicant’s records were in a coherent state, they should have been available for production almost immediately. Mr Hawchar was unwilling to give evidence about the circumstances surrounding the production of records after 24 May 2017. He invoked the privilege against self-incrimination when asked about the episodic nature of the production process. That brings me to the applicant’s submissions about what I should make of allegations of a contravention of s 211.
There are two legs to the applicant’s submissions. The first leg suggests the Tribunal is not empowered to reach a view on whether the applicant or Mr Hawchar contravened

s 211 because that is a criminal provision and only a court can reach a view on that question following charges and a trial. The second limb deals with the practical impediments to the applicant defending itself in civil proceedings where Mr Hawchar invokes the privilege against being required to give potentially self-incriminating evidence.
The applicant’s first submission is based on a reading of the High Court’s judgment in Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd (2015) 225 CLR 352. In that case, the High Court considered whether the Authority was able to form a view that the licensee had engaged in conduct that constituted a criminal offence – but form that view on the ordinary civil standard rather than on the balance of probabilities.

To be clear, the Authority in that case was not purporting to decide the licensee was guilty of the offence and that criminal sanctions should flow. In issue was whether the Authority could take conduct prohibited in a criminal provision into account in the course of administrative proceedings in the absence of criminal charges. The High Court explained (at [33] per French CJ, Hayne, Kiefel, Bell and Keane JJ):
…it is not offensive to principle than an administrative body is empowered to determine whether a person has engaged in conduct that constitutes a criminal offence as a step in the decision to take disciplinary or other action.
Notwithstanding that clear statement, the applicant suggests a proper reading of the decision in Today FM worked to the applicant’s advantage. It argued the Authority in Today FM had been explicitly conferred with the power to form a view in the course of an administrative process as to whether a licensee had contravened a criminal or civil penalty provision. The applicant in this case says there is no equivalent conferral of power in the NVR Act and the decision in Today FM should be read narrowly.
I disagree. I start from the proposition that s 211 (and, for that matter, s 108) forms part of the regulatory framework that governs the operations of the applicant and other RTOs. The importance of the obligation imposed by s 211 is reflected in the fact the parliament chose to attach a criminal sanction as opposed to a civil penalty. The reason for that is obvious: a regulatory regime with the objectives I have already discussed is naturally concerned to protect and preserve records of students enrolled in recently deregistered RTOs. One might argue the criminal sanction is used because, having cancelled the registration, ASQA has no other sanctions it can impose – but the history of these proceedings suggests that is not necessarily true. An applicant is entitled to seek a review of the cancellation decision. Its capacity for complying with the legal and regulatory requirements imposed upon a licensee would typically be in issue in the course of that review. How could the Tribunal ignore the applicant’s failure (or the failure of its chief executive) to comply with a requirement – any requirement, whether a criminal sanction attaches or not – in the course of deliberating over the applicant’s capacity for complying with the regulatory regime?
I accept the Fit and Proper Person requirements I have already outlined refer to criminal convictions as relevant matters that may be taken into account. But I note sub-clause (k) of those criteria permits me to take into account other matters that may be relevant. I am satisfied the applicant’s failure to comply with an obligation imposed under the NVR Act – especially where that obligation is central to the achievement of the objectives of the regulatory regime – is, at a minimum, a relevant matter under sub-clause (k) of the criteria for assessing whether a person is a Fit and Proper Person. The alternative interpretation would result in an absurd outcome. The parliament surely did not intend that the regulator would be prevented from taking into account evidence that an applicant had failed to comply with a regulatory rule that was so serious it warranted a criminal sanction just because the criminal sanction had not actually been imposed.
That brings me to the second leg of the applicant’s argument. Mr Hawchar claimed the privilege when asked questions at the hearing about the delivery of records to ASQA pursuant to s 211. The applicant argued it would be unfair to draw inferences against it in those circumstances. Specifically, while asserting in submissions that all of the records have been supplied – and attributing the initial delay to legal advice – the applicant argued Mr Hawchar’s silence prevented it from properly addressing the extent of the contravention of s 211.
Mr Hawchar’s assertion of the privilege raises some prickly questions about what inferences can legitimately be drawn against the applicant. Nice questions of procedural fairness might arise. Ultimately, I do not need to become entangled in all that. I have objective evidence before me in the form of the affidavits of Mr Cox dated 16 March 2017, 27 March 2017, 30 March 2017, 30 March 2017 and 4 August 2017 that confirm the bulk of the records were not provided within the time required in s 211, and that the failure to supply the documents continued until at least 24 May 2017. Mr Hawchar cannot argue there was any doubt over what was required in terms of disclosure following publication of my reasons for interlocutory decision on 12 April 2017. But even if he could, s 211 does not provide for any defences. The fact he might have misunderstood the obligation or made reasonable attempts to comply would not excuse him from liability.
The lengthy delay in complying with the requirements imposed under s 211 is a very serious matter given the objectives of the regulatory framework. At a minimum, the delay calls into question the applicant’s commitment to complying with the regulatory framework. But it also raises troubling questions over the integrity of the applicant’s record-keeping. If the relevant documents were stored in a coherent form in a proper database, they should have been available at very short notice even if the applicant had ceased trading. (I would add this is not a case where Mr Hawchar was used to being surrounded by a large staff who had become unavailable when the cancellation decision was made. It was always a small operation and Mr Hawchar gave evidence that he was across virtually every aspect of what occurred. The fact the applicant had ceased trading should not have made any difference in the circumstances of this case to the applicant’s ability to produce the documents.) The delay in supplying the documentation also speaks poorly of the applicant’s commitment to cooperating with the regulator.
Other evidence
ASQA attempted to introduce evidence from one of its officers, Ms Jacqueline Ann Steward, enclosing material provided by the Australian Federal Police. Ms Steward’s affidavit dated 11 August 2017 explained that a notice had been issued to the AFP under s 210 of the NVR Act requiring that the AFP produce information in its possession. It turns out the AFP had been conducting a criminal investigation which yielded information that ASQA thought might be useful to its work. Ms Steward’s affidavit included extracts of correspondence with the AFP confirming the material supplied by the AFP was “shared, and made available for use…by [ASQA] in accordance with s 3ZQU [of the Crimes Act 1914]…”.
The applicant said the evidence could not be used in Tribunal proceedings because that was not one of the permitted uses of the material contemplated in s 3ZQU of the Crimes Act 1914 (Cth) (the Crimes Act). Mr Mack acknowledged in his submissions that the material could be used by ASQA for the purpose of “preventing, investigating or prosecuting an offence” (s 3ZQU(1)(a)) – but he argued there is no statutory warrant for using the material in administrative proceedings of the kind contemplated here. Mr Mack added the explanatory memorandum to the bill which introduced s 3ZQU expressly noted it would be inappropriate to authorise the use of the material in judicial or administrative review proceedings.
ASQA argued in its written submissions that the material was produced in response to the notice under s 210 of the NVR Act, which avoids any limitation that might be imposed in the Crimes Act. (Mr Mack also suggested during cross-examination that information gathered under a s 210 notice should not be used for the purpose of administrative proceedings. He did not fully develop that line of argument during his final submissions.) Mr Cox, in written submissions, points out s 3ZQU(4) confirms that section does not limit the use or production of documents under any other law. On that basis, it was argued ASQA should be permitted to use the material in administrative proceedings.

I am inclined to the view that I could make use of the material supplied by the AFP notwithstanding the apparent limits in s 3ZQU of the Crimes Act. I reach that view with some hesitation because I would have preferred more extensive submissions on the point. As it happens, I am not satisfied the material provided by the AFP should be given any weight. If the material was to be admitted, it should have been properly explored and tested and been the subject of submissions. It is difficult to know what to make of the material in the absence of that assistance. I acknowledge I did not insist that be done at the hearing but that was at least partly because the dispute over the evidence was not made clear in advance of the hearing. If the dispute and the technical issues had been identified clearly in advance, the Tribunal would have been in a better position to determine how the material should be handled and rule accordingly. In any event, I am not satisfied the material would make any difference to the outcome in these proceedings.
Before concluding my discussion of the evidence I should mention the statements provided by three other witnesses called by the applicant who were cross examined at the hearing. Messrs Ahmad Hamdan, Talat Qazzz and Jawdat Elmir all confirmed in written statements that they had participated in industry consultation sessions conducted by

Mr Hawchar where they discussed courses. Mr Cox questioned each of them about their statements but nothing came of that evidence. ASQA did not make any submissions as to how I should deal with that material. While the evidence does not really add anything to the case, I have no reason to reject it.
SHOULD THE APPLICANT BE SUBJECT TO REGULATORY ACTION – AND WHAT FORM SHOULD THAT ACTION TAKE?
I have concluded the applicant was not compliant with a number of provisions of the Standards, most obviously Standard 1.8 which assumes particular importance in a regulatory framework that prioritises the integrity of assessment processes in the issue of qualifications. It follows I am satisfied the applicant contravened the condition of its registration imposed pursuant to s 22. (I infer the evidence suggesting a contravention of Standard 1.8 also suggests a contravention of the civil penalty provision in s 108, but – assuming for the moment that is so – I do not think it adds anything to the case against the applicant other than to underline the importance of a contravention of Standard 1.8.)
While I accept the extent of the non-compliance with the Standards (and thus the condition of registration imposed pursuant to s 22) may not have been as great as ASQA first thought, and that the applicant moved to address many of the remaining shortcomings by the time of the hearing, I take little heart from that evidence. The applicant failed to make use of the opportunity it had during a prolonged reconsideration and review process to correct all of the gaps in the material it had provided to ASQA. Indeed, it was not until Ms Hodge’s intervention after she saw Mr Hawchar’s evidence that the applicant was able to offer a more coherent explanation of the state of its compliance. That failure to clearly explain its position at an early stage may also amount to a contravention of the obligation to cooperate with the regulator. The obligation to cooperate is a condition of registration imposed pursuant to s 27. The obligation is also contained within Standard 8, so that a failure to meet the obligation (which includes the obligation to ensure the applicant complies with its legal obligations more generally) amounts to a contravention of s 22.
Mr Hawchar played a central role in the organisation. He clearly did not understand – or at least was unable to coherently explain – the applicant’s own processes and the way in which it achieved compliance with the Standards. If ASQA overestimated the extent of the non-compliance that existed when it made the reconsideration decision, that was in no small part due to the fact Mr Hawchar failed to explain what the applicant says was the true position. Being compliant is one thing; being unable to explain how one is compliant is a problem in and of itself. It is no answer to say the applicant was able to engage outside experts to shape the applicant’s operations and processes. While ever the applicant remained what was really a one-man-show, there was no guarantee the applicant would adopt what the consultants suggested. The situation might have improved as the organisation grew and additional staff were engaged to develop a more professional operation, but it is difficult to be sure that growth would be productive of good outcomes given Mr Hawchar’s lackadaisical approach to recruitment and engagement. That approach was evident in his recruitment of Mr Fong.
The evidence about Mr Hawchar’s performance and capacity is certainly relevant to the question of whether the applicant is able to satisfy the Fit and Proper Person Requirements. Compliance with those requirements is a condition of registration pursuant to s 23. The apparent contravention of s 211 is also relevant in this context. I have already explained that contravention of the obligation to produce records should be regarded as a very serious matter. It is certainly a relevant consideration under sub-clause (k) of the criteria for establishing whether the Fit and Proper Person Requirements have been satisfied.
I am satisfied Mr Hawchar’s performance is such that I cannot be satisfied the applicant meets the Fit and Proper Person Requirements. He has not demonstrated the competence and commitment that is to be expected of a diligent manager of an organisation that is conducting a regulated activity of this nature. Given Mr Hawchar’s central role in the operations and governance of the applicant, I am satisfied his shortcomings count against the applicant. (I should add I would reach that conclusion even if I did not have regard to the apparent failure to comply with the obligation in s 211.) It follows there is a contravention of the condition of registration imposed pursuant to s 23.
Regulatory action is certainly an option given I have found the applicant has failed to comply with the conditions referred to in s 22 and 23. What form should that action take?
I have considered the range of possible regulatory responses provided for in the NVR Act. In the circumstances, I am not satisfied any action short of cancelling the applicant’s registration would be appropriate. This is not simply a case where the applicant has failed to comply with the condition imposed pursuant to s 22. I have expressly acknowledged the extent of that failure was likely much less significant by the time the matter came on for hearing, and that some of the non-compliance might be explained (or at least be difficult to assess) given the applicant had ceased trading. In this case, the evidence of

Mr Hawchar’s ineffective stewardship of the applicant’s affairs and the failure to comply with the obligation in s 211 carry particular weight in my decision to cancel registration because those matters suggest the applicant is likely to experience ongoing difficulty in complying with the regulatory regime. Suspension is not an appropriate response, and binding directions are unlikely to assist. The imposition of additional conditions is also not appropriate.
I would add that the failure to comply with the obligation imposed in s 211 (even if I do not characterise that failure as a contravention of the Standards) would in and of itself raise serious questions about the applicant’s ability and commitment to achieving and remaining in compliance with the regulatory framework. I am satisfied that cancellation was the appropriate response to that finding in any event.
CONCLUSION
I am satisfied the applicant is likely to experience ongoing difficulty in complying with the regulatory framework. That regulatory framework has been introduced for good reasons - as identified in s 2A. The decision to cancel its registration should be affirmed.

I certify that the preceding 104 (one hundred and four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

............................[SGD]............................................
Associate
Dated: 11 December 2018

Date(s) of hearing: 18 - 19 September, 5 October and 15 December 2017

Date final submissions received: 14 November 2017

Counsel for the Applicant: Mr J Mack

Solicitors for the Applicant: GPZ Legal / Edmond Khoury Solicitors

Solicitors for the Respondent: Mr D Cox - Australian Skills Quality Authority

Fairness	The individual learner’s needs are considered in the assessment process. Where appropriate, reasonable adjustments are applied by the RTO to take into account the individual learner’s needs. The RTO informs the learner about the assessment process, and provides the learner with the opportunity to challenge the result of the assessment and be reassessed if necessary.
Flexibility	Assessment is flexible to the individual learner by:  reflecting the learner’s needs;  assessing competencies held by the learner no matter how or where they have been acquired; and  drawing from a range of assessment methods and using those that are appropriate to the context, the unit of competency and associated assessment requirements, and the individual.
Validity	Any assessment decision of the RTO is justified, based on the evidence of performance of the individual learner. Validity requires:  assessment against the unit/s of competency and the associated assessment requirements covers the broad range of skills and knowledge that are essential to competent performance;  assessment of knowledge and skills is integrated with their practical application;  assessment to be based on evidence that demonstrates that a learner could demonstrate these skills and knowledge in other similar situations; and  judgement of competence is based on evidence of learner performance that is aligned to the unit/s of competency and associated assessment requirements.
Reliability	Evidence presented for assessment is consistently interpreted and assessment results are comparable irrespective of the assessor conducting the assessment.

Validity	The assessor is assured that the learner has the skills, knowledge and attributes as described in the module or unit of competency and associated assessment requirements.
Sufficiency	The assessor is assured that the quality, quantity and relevance of the assessment evidence enables a judgement to be made of a learner’s competency.
Authenticity	The assessor is assured that the evidence presented for assessment is the learner’s own work.
Currency	The assessor is assured that the assessment evidence demonstrates current competency. This requires the assessment evidence to be from the present or the very recent past.

Date(s) of hearing:	18 - 19 September, 5 October and 15 December 2017
Date final submissions received:	14 November 2017
Counsel for the Applicant:	Mr J Mack
Solicitors for the Applicant:	GPZ Legal / Edmond Khoury Solicitors
Solicitors for the Respondent:	Mr D Cox - Australian Skills Quality Authority