Brindabella Christian Education Limited and Minster for Education and Youth

[2021] AATA 4629

Brindabella Christian Education Limited and Minster for Education and Youth [2021] AATA 4629 (25 November 2021)

Division:GENERAL DIVISION

File Number(s):      2021/3753

Re:Brindabella Christian Education Limited

APPLICANT

AndMinster for Education and Youth

RESPONDENT

DECISION

Tribunal:Senior Member Damien O’Donovan          

Date:25 November 2021

Date of written reasons:        15 December 2021

Place:Canberra

The summons issued to Saward Dawson is set aside.

……………….[sgd]……………

Senior Member Damien O’Donovan

Catchwords

PRACTICE AND PROCEDURE – objection to production of summons material whether summons is fishing exercise – whether summons is oppressive – whether summons is relevant – summons set aside. 

Legislation

Acts Interpretation Act 1901 s 33

Administrative Appeals Tribunal Act 1975 ss 40A, 41

Administrative Appeal Tribunal Regulation 2015 reg 13

Australian Education Act 2013 ss 73, 75, 81

Cases

Cosco Holdings Pty Ltd v Commissioner of Taxation & Anor [1997] FCA 1504
Re Bird and Military Rehabilitation and Compensation Commission (2006) 91 ALD 691
Re Perpetual Trustee Co (Canberra) Ltd v Commissioner for ACT Revenue (1993) 29 ALD 817

Steele v Comcare [2018] AATA 481

REASONS FOR DECISION

15 December 2021

1. Brindabella Christian College is a private school which operates in the Australian Capital Territory. The applicant is a company limited by guarantee. On 1 January 2002 it was approved as an ‘approved authority’ for Brindabella Christian College pursuant to section 73 of the Australian Education Act 2013 (the Act).  

2. The Act is principally concerned with facilitating Commonwealth funding of school education and recurrent funding under the Act is paid to a school’s approved authority. For government schools, the approved authority is the relevant State or Territory. For a non-government school, the approved authority is the body corporate approved by the Minister for the school.

3. A person applies for approval as an approved authority for a school under Division 2 of Part 6 of the Act. The Act sets out some basic requirements for approval as an approved authority, which include that the person is fit and proper to be an approved authority for one or more schools and that the person is financially viable.

4. Approval of an approved authority may be made subject to one or more conditions, and the approved authority must comply with those conditions.

5. Under section 81 of the Act, the Minister may vary or revoke an approved authority’s approval for one or more schools on the Minister’s own initiative if the Minister is satisfied that the person does not comply, is not complying, or has not complied with certain provisions of the Act, including the fit and proper requirement and the financial viability requirement.

6. On 17 May 2021, a delegate of the Minister made a decision that the applicant was not a fit and proper person to be the approved authority for Brindabella Christian College. The delegate decided to vary the applicant’s approval as an approved authority and certain conditions were imposed on the approval. The conditions required changes to, and a review of, governance arrangements. Financial conditions were also imposed, including:

   (a)a condition that the applicant’s audited financial statements for 2020,[1] 2021, 2022 and 2023 must disclose related party transactions in accordance with Australian Accounting Standards for reporting entities; and

   (b)a condition that the applicant engage an independent professional to review the financial affairs of the applicant.

   [1] The coverage of the 2020 financial statements came about as a result of delay in finalising them.

7. The reasons given by the delegate also express concerns as to whether the applicant continues to meet the financial viability requirement to be an approved authority. However, at the time the decision was made, there was not sufficient evidence available to determine whether the applicant was non-compliant.

8. The applicant applied to the Tribunal for review of that decision.

9. On 8 June 2021, a stay application was sought by the applicant. On 25 June 2021 and pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal ordered that the operation of the reviewable decision be stayed until the decision of the Tribunal on the application for review comes into operation.

10. When statements of issues were exchanged, the respondent’s statement of issues included the following:

    (a)…whether the Applicant does not comply, is not complying, or has not complied, with the requirements that it:

    ·not conduct the School for profit, pursuant to section 75(3)

    ·be financially viable, pursuant to section 75(4)

    ·be a fit and proper person to be an approved authority for the School, pursuant to section 75(5).

11. While an issue remains between the parties about the extent to which the respondent should be expected to particularise the conduct of the applicant said to support a finding of non-compliance with these requirements, there is no dispute that any review of the decision will require investigation of the applicant’s financial affairs, if only to determine whether the financial conditions imposed by the delegate were appropriate.

    Summons

12. In this context, the respondent requested that the Tribunal issue a summons to produce documents to the proper officer, Saward Dawson. Saward Dawson is the independent financial statement auditor for the applicant.

13. On 9 November 2021, the Tribunal issued a summons, returnable on 29 November 2021 to Saward Dawson. The summons was in the following terms:

    Any draft or final audit documentation, including but not limited to draft or final financial statements and correspondence and file notes relating to draft or final audits; and any governance documents, including but not limited to any draft or final governance frameworks or policies and any correspondence and file notes relating to draft or final governance frameworks or policies for the period 1 January 2020 to date related to Brindabella Christian Education Limited (ABN: 21 100 229 669).

14. On 17 November 2021, the applicant applied to have the summons set aside. The Tribunal listed the application for hearing on 25 November 2021and made directions for the filing of material in support of the application, and for the filing of outlines of submissions.

15. The applicant filed an affidavit sworn by Peter Shields. He is a partner of Saward Dawson. In that affidavit, he advised that the firm had not yet issued its audit opinion on the applicant’s 2020 financial statements. He provided an estimate that the time that would be taken to comply with the summons would be 6.5 days of staff time. Mr Shields estimated that the cost to Saward Dawson in terms of actual staff costs would be in the order of $2,562. In addition, Saward Dawson would lose the opportunity to charge out those staff on other jobs, which would amount to $7,714.

16. In written submissions, the applicant (and Saward Dawson) sought to have the summons set aside on the basis that:

    (a)the documents sought were not relevant to any issue in the proceedings;

    (b)the summons, given the narrow factual issues in dispute and the wide scope of the summons, was fishing; and

    (c)the summons was oppressive.  

17. In its submissions, the respondent rejected the proposition that the summons was not relevant to any issue in the proceedings. The respondent contended that there is a real possibility that the documents sought may assist in the resolution of the issues in the proceedings. The respondent cast the question to be determined by the Tribunal in broad terms – whether the applicant does not comply, is not complying, or has not complied, with section 75 of the Act.

18. It resisted the contention that the summons as drafted was oppressive and suggested that ‘Saward Dawson produce its entire file for the period identified in the summons’ leaving it to the parties to sort through it’. In the alternative, the respondent noted that the respondent was willing to meet Saward Dawson’s reasonable expenses for complying with the summons in accordance with regulation 13 of the Administrative Appeal Tribunal Regulation 2015.

19. Each party made further oral submissions at a telephone directions hearing conducted by the Tribunal on 25 November 2021.

20. At the outset, the applicant’s counsel acknowledged that the applicant’s audited accounts were relevant to issues in dispute in the matter and that financial statements for the calendar year 2020 had not yet been provided. Counsel for the applicant advised that finalisation of the financial statements had been delayed by lockdowns required by COVID-19 but they would be available shortly and would be provided by his client when they became available.

    Legal Framework

21. The power of the Tribunal to issue a summons to produce documents is found in section 40A of the Administrative Appeals Tribunal Act 1975 (AAT Act). It provides as follows:

    Power to summon person to give evidence or produce documents

    (1)For the purposes of a proceeding before the Tribunal, the President, an authorised member or an officer of the Tribunal may summon a person to do either or both of the following, on the day, and at the time and place, specified in the summons:

    (a)appear before the Tribunal to give evidence;

    (b)produce any document or other thing specified in the summons.

    Note: This section does not apply in relation to proceedings in the Social Services and Child Support Division, as a result of provisions in the enactments that authorise applications for reviews that will be heard in that Division.

    (2)The President or an authorised member may refuse a request to summon a person.

    (3)A person may, before the day specified in the summons, comply with a summons to produce a document or thing by producing the document or thing at the Registry from which the summons was issued. If the person does so, the person is not required to attend the hearing of the proceeding unless:

    (a)the summons or another summons requires the person to appear before the Tribunal; or

    (b)the Tribunal directs the person to attend the hearing.

22. There is no power expressly authorising the setting aside of a summons once issued. However, section 33(3) of the Acts Interpretation Act 1901 provides:

    Where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

23. This provision has been interpreted as authorising the Tribunal to set aside a summons.[2]

    [2] Re Perpetual Trustee Co (Canberra) Ltd and Commissioner for ACT Revenue (1993) 29 ALD 817; Re Bird and Military Rehabilitation and Compensation Commission (2006) 91 ALD 691.

24. It has also been acknowledged that when the Tribunal exercises its powers in relation to the issuing and setting aside of summonses, the principles which apply to the issuing of subpoenas by courts are relevant.[3]

    [3] Cosco Holdings Pty Ltd v Commissioner of Taxation & Anor [1997] FCA 1504.

    Consideration

25. I was invited to consider three bases for setting aside the summons. The first was that the summons sought documents which were not relevant to any issue in the proceedings. I do not accept that submission. The delegate varied the applicant’s approval by imposing conditions which specifically related to the financial management of the applicant and in particular imposed a requirement to disclose related party transactions. It is likely that an examination of the applicant’s financial affairs will shed light on the question of whether such a condition is appropriate if a finding is made that the applicant does not meet the fit and proper requirement.

26. Given that the documents are relevant to an issue in the proceedings and ‘it is on the cards’ that relevant material will be obtained from the issue of the summons, I do not regard the respondent as having engaged in ‘fishing’ in seeking to have the summons issued.

27. However, having regard to the affidavit of Peter Shields, I am satisfied that the summons in the terms presently drafted are oppressive in the sense of being seriously and unfairly burdensome.[4] The respondent did not contest factually that the summons in its current form did require its recipient to undertake 6.5 days work in order to properly comply with it, or that the direct costs flowing from the summons were $2,652 and that when the opportunity cost was included it would amount to $7,714.

    [4] See Steele v Comcare [2018] AATA 481 at [15] and the authorities cited there.

28. The respondent resisted the finding of oppression on two bases. The first was that the recipient of the summons should simply bundle up its entire file without review and let the parties deal with whatever issues might arise. I don’t regard that as an option reasonably available to a professional services firm. It is likely that the firm owes the applicant obligations of confidentiality. To ignore such obligations and potentially provide to a third party a range of documents without any legal obligation to do so (and in fact a legal obligation not to do so) carries legal and reputational risks for the firm which they have an understandable desire to avoid. Accordingly, I do not accept that the option of bundling up their file is an option open to the firm and accept the assessment of Mr Shields that proper compliance with the summons will involve his firm incurring very significant costs.

29. The second basis on which the respondent resists a finding of oppression in this matter is that the Minister is prepared to meet the reasonable costs of complying with the summons as provided for in the AAT Regulations.

30. The AAT Regulations relevantly provide:

    For a summons referred to in section 40A of the Act, the allowances payable for a person who is summoned to produce something are the person’s reasonable expenses of producing the thing.

31. In my assessment, that would entitle Saward Dawson to recover their expenses incurred in producing the documents ($2,562) but not the opportunity cost of being unable to charge out their staff to paying clients ($7,714). This leaves the business carrying potential lost revenue of $5,152. Given the size of the firm and the stage at which proceedings are at present, I regard that as seriously and unfairly burdensome.

32. In those circumstances the summons should be set aside.

33. However, I note that the respondent will be obtaining access to both the audited financial statements of the applicant for the calendar year 2020 and relevant bank statements shortly. It may be that as a result of access to that material, the respondent can prepare a refined summons focussed on the issues of concern which appear to be related party transactions and the overall financial viability of the applicant. A more narrowly cast summons may be appropriate to issue in those circumstances.

    Decision

34. The summons is set aside.  

I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member Damien O'Donovan .

...............................[sgd].............................

Associate

Dated: 15 December 2021

Date of hearing:	25 November 2021
Date final submissions received:	24 November 2021
Solicitor for Applicant:	Christopher Edward Moore, Hicksons Lawyers
Counsel for Applicant:	Tom Brennan SC, Wentworth Chambers
Solicitor for Respondent:	Laura Hinwood, Sparke Helmore