Chicho Family Day Care Pty Ltd and Secretary, Department of Education

[2020] AATA 426

Chicho Family Day Care Pty Ltd and Secretary, Department of Education [2020] AATA 426 (6 March 2020)

Division:GENERAL DIVISION

File Number:          2019/1952

Re:Chicho Family Day Care Pty Ltd

APPLICANT

AndSecretary, Department of Education

RESPONDENT

DECISION

Tribunal:Dr Stewart Fenwick, Senior Member

Date:6 March 2020

Place:Melbourne

The Tribunal affirms the decision under review.

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

Dr Stewart Fenwick, Senior Member

Catchwords

CHILD CARE – BENEFITS AND REBATES – cancellation of approval as a child care service – whether the applicant has breached relevant regulatory framework –consideration of frequency and seriousness of breaches – consideration of appropriate sanction – decision affirmed

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
A New Tax System (Family Assistance) Act 1999 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (Cth)
Education and Care Services National Law Act 2010 (NSW)
Education and Care Services National Regulations 2011 (NSW)
Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth)

Secondary Materials

Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 (Cth)

Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (Cth)

Child Care Benefit (Session of Care) Determination 2016 (Cth)

REASONS FOR DECISION

Dr Stewart Fenwick, Senior Member

6 March 2020

BACKGROUND

1. Chicho Family Day Care Pty Ltd (‘Chicho’) applied on 8 April 2019 for review of a decision by an authorised review officer (‘ARO’) of the Respondent dated 12 March 2019. The ARO affirmed a decision of 19 June 2018 to cancel Chicho’s approval as a child care service for the purposes of the family assistance law.

2. This approval had previously been given, effective 19 January 2016, under s 195 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (‘the Administration Act’). Chicho was advised in a letter from a delegate of the Respondent dated 6 January 2016 of its obligations, including to report child care information to the Department electronically, and to meet the legislated conditions for continued approval.

3. The ‘family assistance law’ is defined under s 3 of the Administration Act as being comprised of that Act, the A new Tax System (Family Assistance) Act 1999 (Cth) (‘the Assistance Act’), and the instruments made under those acts. Amendments to the family assistance law came into effect on 2 July 2018, however the law in effect prior to this date was ‘saved’ as ‘continued law’ for the purposes of things done or matters arising in relation to providers approved prior to that date.[1] This continued law applies in this matter.

   [1] Clauses 9 and 10, Schedule 4, Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth).

4. The history of the cancellation, briefly, is as follows:

   (a)a Notice of Intention to Impose Sanction in the form of cancellation of approval was issued to the Applicant by the Respondent on 18 April 2018, citing instances of non-compliance (‘the original breaches’);

   (b)Chicho’s legal representative made submissions and provided documents in response on 15 May 2018;

   (c)a delegate of the Respondent made a decision to cancel Chicho’s approval on 19 June 2018;

   (d)a Debt Notice was issued to Chicho on 12 July 2018 in the sum of $2,096.31;

   (e)Chicho sought internal review of the cancellation decision on 16 July 2018, and their legal representative made submissions and provided documents in support on 31 July 2018;

   (f)on or about 13 August 2018 Chicho paid the debt;

   (g)on 12 March 2019, the ARO affirmed the delegate’s decision;

   (h)on 8 April 2019, the Applicant applied to the Tribunal for review of the ARO’s decision;

   (i)on 6 June 2019, the Respondent advised Chicho’s legal representative that it had identified further instances of non-compliance (‘the additional breaches’);

   (j)the Applicant’s Statement of Facts, Issues and Contentions (‘SFIC’) dated 24 June 2019 addressed matters raised by the original and additional breaches;

   (k)a bundle of Additional Relevant Material was lodged with the Tribunal by the Respondent on 17 September 2019, setting out more instances of non-compliance of which Chicho had also been notified (‘the further additional breaches’);

   (l)the Tribunal conducted a directions hearing on 10 October 2019 to discuss the further additional breach material. The Respondent advised that the material was predominantly in respect of existing categories of breach, but also contained one new category. The material was accepted on the understanding that there may be some prejudice to the Applicant given the imminent hearing, and the Tribunal may take this into account when considering what weight to give the material;

   (m)the substantive hearing was conducted between 24 and 25 October 2019.

5. The Respondent lodged documents pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (‘T documents’), and also lodged records and summaries of records relating to alleged breaches of obligations. At the hearing evidence was given by Mr Osman Ismail, the Applicant’s Director.

6. The Applicant’s business name indicates that the nature of the child care service operated was ‘family day care’. This kind of service is not defined with the family assistance law,[2] but is a service in which child care is typically provided in private homes rather than child care centres. Carers are referred to as ‘educators’, and an approved service typically reports activity and services provided by multiple educators, at multiple sites.[3]

   [2] But see s 5 Education and Care Services National Law Act 2010 (Vic) (‘the National Law’).

   [3] See Child care in Australia: a quick guide, Research Paper Series 2014-15, Parliament of Australia and s 5 of the National Law.

7. The Respondent’s representative produced at the hearing a document titled ‘Overview of Alleged Breaches’ which set out the number of breaches by category (grouped under relevant subheadings) and the instance on which they were cited. Below is a modified version of the document, using the terms conventionally adopted for the categories.[4]

   [4] Some breaches not replicated in this table, but found in the original, are addressed under Considerations.

Category	Original	Additional	Further	Total
Under s 219N of the Administration Act
Child swapping	438 sessions	N/A	18 sessions	456
Educator overseas	92 sessions	N/A	N/A	92
Children overseas	52 sessions	N/A	N/A	52
Children 14 years or older	1,798 sessions	N/A	N/A	1,798
Children in secondary school	N/A	462 sessions	N/A	462
Overlapping sessions of care	N/A	6 sessions	17 sessions	23
Absences before care commenced	N/A	1 session	49 sessions	50
Absences after care ceased	N/A	7 sessions	53 sessions	60
Late attendance reporting	N/A	10 instances	128 instances	138
Under s 219AB Administration Act
Late enrolment reporting	N/A	N/A	179 instances	179
Eligibility Rules
Applicant not provide CRN of educators with CRN	N/A	15 instances (educators) (8,264 sessions)	8 instances (educators) (20,105 sessions)	23 28,369
National Law/ Regulations
Educator-to-child ratio – Preschool children	N/A	9 hourly blocks	N/A	9
Educator-to-child ratio	N/A	6 hourly blocks	48 hourly blocks	54

LEGISLATION

1. This outline of the family assistance law describes the regime prior to the amendments that came into force in 2 July 2018. Under the Assistance Act, family assistance is defined as including a number of payment types including ‘child care benefit’ and ‘child care rebate’. Entitlement for these payments lies in individuals, with eligibility established under the Assistance Act (see Part 3, Divisions 4 and 5). Under the Administration Act, however, these payments are made to approved child care services directly and generally passed on to individuals (see Part 8A).

2. The reference in the preceding table of alleged breaches to ‘sessions’ is a reference to the term ‘sessions of care’. This term is defined as the minimum time for which a service provider charges a fee for providing care, under an arrangement by which an individual agrees to pay irrespective of any payment made under the family assistance law.[5] This provision reinforces the approach taken in the family assistance law, in which child care services are not paid to operate by the Commonwealth, but whose operations are inherently aligned with the underlying entitlements of individual users. Hence, any action taken with regard to approval under the family assistance law does not strictly relate to accreditation to operate as a child care service, which is regulated under the various State and Territory schemes.

   [5] See Child Care Benefit (Session of Care) Determination 2016 made under s 9 of the Assistance Act.

3. Division 1 of Part 8 of the Administration Act establishes the requirements that must be met for continued approval as a child care service for the purposes of the family assistance law, and the sanctions for non-compliance. Under s 196 it is a condition of continued approval, in particular, that a service: satisfy eligibility rules made under s 205(1)(b); not contravene obligations imposed under the family assistance law; and, comply with Commonwealth, and State or Territory laws. The relevant eligibility rules in this case are the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (‘Eligibility Rules’).

4. Under the Eligibility Rules an operator of a service must be a ‘suitable person’ (s 16(1)) as considered by reference to factors set out in s 7. These factors include, among others, matters relevant to their ability to manage a service, their capacity to comply with laws and standards and their record of compliance with Commonwealth, State and Territory laws. Certain undertakings are also required under s 10. These include matters such as operating times and the identification of carers and reporting of their sessions of care. Additional undertakings are required of operators of family day care services under ss 10A and 10AB. These involve ascertaining relationships between enrolled children and carers, particularly with reference to the provisions of the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (‘No-one eligible Determination’) and meeting any further reporting requirements that arise.

5. The No-one eligible Determination is established under s 49(3) of the Assistance Act and determines classes of children in respect of whom there can be no eligibility for child care benefit. There is, accordingly, no eligibility for a carer’s own children or their partner’s children (s 6) or the children of another carer or their partner (s 8). Exceptions arise in the second instance including where a child is an ‘eligible disability child’. This term is defined in s 4 as a child to whom one or more specified medical or psychological conditions applies. There is also no eligibility for children 14 years or older or who attend secondary school (s 9), subject to certain specified exemptions.

6. A range of further obligations are set out in Part 8A of the Administration Act. These include the obligation to give reports to the Secretary for every week in which a session of care is provided to a child whose enrolment has been notified to and approved by the Secretary (s 219N). Under s 10 of the Assistance Act, a specific number of absences of children from sessions of care are permitted, however, such an absence may not fall on a day prior to or subsequent to the service providing care (s 10(2)).

7. The Education and Care Services National Regulations 2011 (NSW) (‘the National Regulations’) are made under the National Law and require certain ratios of service coordinators to educators (reg 123A) and prevent an educator caring for more than seven children at any one time, of whom no more than four may be pre-school age or under (reg 124), subject to specified exemptions.

8. The sanctions available for non-compliance with a condition for continued approval of a service are set out in s 200 of the Administration Act, comprising one or more of the following:

   (a)vary the conditions for the continued approval of the service imposed under subsection 199(2);

   (b)impose additional conditions for the continued approval of the service under subsection 199(2);

   (c)reduce the number of any child care places allocated to the service under section 207;

   (d)suspend the service’s approval;

   (e)cancel the service’s approval;

   (f)withhold the payment of enrolment advances to the service under section 219RA;

   (g)require the remittal to the Secretary of enrolment advances paid to the service under section 219RA;

   (h)suspend, for a maximum of 3 weeks, payment under section 219Q or subsection 219QA(2) in respect of fee reduction;

   (i)suspend, for a maximum of 3 weeks, payment under section 219QC or subsection 219QD(2) in respect of child care rebate.

9. Under s 200(5) of the Administration Act, the Minister may, by legislative instrument, determine factors to be taken into account in applying subsection (1), above, to an approved child care service. The relevant instrument is the Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 (‘the Breach Determination’). This Determination provides as follows:

   4Factors relevant to sanction decision for all services

   (1)In applying subsection 200(1) of the Family Assistance Administration Act to an approved child care service, the Secretary must take in to account:

   (a)the severity of the failure by the service to comply with the conditions for continued approval by the service;

   (b)the frequency of any previous failures by the service to comply with the conditions for continued approval of the service; and

   (c)whether the failure by the service to comply with the conditions for continued approval of the service may threaten the health or welfare of any child in the care of the service.

   (2)Once, having regard to the factors in subsection (1) the failure is considered to have been serious or frequent in the past, the appropriate sanction is cancellation, notwithstanding commitments or measures taken by the service to remedy the contravention or prevent future contravention.

   4APresumption in favour of cancellation with respect to certain breaches

   (1)  Where the contravention involves repeated breaches of the obligation in section 219N of the Family Assistance Administration Act to give reports that allow the Secretary to accurately determine matters relating to eligibility and entitlement, as set out in subsection (4) of that section, including, but not limited to, where:

   (a)the service has reported fees that were an inaccurate representation of a genuine legal liability; or

   (b)the service has reported a session of care that was not a session of care as defined under the Child Care Benefit (Session of Care) Determination 2016 (such as where the reported fees exceed the “maximum amount” referred to in that determination); or

   (c)the service has reported care in relation to a child for whom no-one is eligible under the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015,

   the appropriate sanction is cancellation.

   (2)  For the purposes of subsection (1), repeated breaches involve either:

   (a)100 sessions or more that are reported inaccurately or otherwise do not contain the information required by the Secretary;

   (b)the payment of child care service payments to the service in excess of $5,000 due to the misreporting described in subsection (1).

   (3)Where the contravention involves providing false, misleading or otherwise inaccurate information about whether reported child care was actually provided to the child, in cases:

   (a)where a service has reported attendance when the relevant educators did not provide the care (including where they are overseas or otherwise incapacitated); or

   (b)where the children did not attend (including because they were overseas or there is evidence that the children were elsewhere at the time care is reported to have been provided),

   the appropriate sanction is cancellation …

   EVIDENCE

10. As noted above, the Applicant’s SFIC addresses the original breaches notified and the additional breaches (notified in June 2019). A written submission was also made responding to the original breach notifications (T8). It is contended in the SFIC that the Applicant had difficulty responding to the additional breaches due to the absence of parents and educators. It was, similarly, contended at the Directions Hearing in October 2019, that the business had been closed which made it difficult for the Applicant to respond to the further additional breaches of which it had been notified. Accordingly, at the hearing, the evidence introduced by the Applicant in examination-in-chief focused principally upon the original breaches. 

11. Mr Ismail gave evidence that he arrived in Australia aged about 19 and first worked in a factory. He undertook a traineeship in hospital administration, going on to work for 20 years in the public service. He served as a common law claims officer at the Transport Accident Commission.

12. In around 2012-2013, Mr Ismail stated he was approached to provide advice and assistance to family day care providers. He travelled around the country giving training and delivering presentations to service providers. He earned his approval as a service provider in 2016 and went on to set up the governance arrangements and recruit educators. Within six months the service entered into a quality assessment process, which was completed around March 2017.

13. Mr Ismail stated that as the Director of the Applicant, he was not involved in day-to-day data entry, but was responsible for overall governance. In cross-examination he stated that he did not train staff as they had already been certified, but did provide coaching to other members of the team. Mr Ismail explained that he employed a supervisor, who was responsible for data entry, an education leader and coordinators at a ratio of one for every 15 educators. The supervisor was experienced with 15 years in the industry.

14. Mr Ismail stated that he had many concerns about the adequacy of the ‘Harmony’ software package which Chicho used, and he explained it was one of the authorised management systems available to services. He considered that there were data integration problems with the Respondent’s Child Care Management System, from which its reports are generated.

    Child swapping

15. This is the term adopted to describe a breach of the No-one eligible Determination where care is provided under a service for children of carers, unless a specified circumstance is met.

16. It was submitted at the hearing that the Applicant accepted responsibility for the breaches notified, and in evidence Mr Ismail stated that the exchange of children between educators was an abuse of the system. However, evidence was introduced to address the case of one child who, it was submitted, met the exception of being an ‘eligible disability child’, and cases of what was described as ‘external’ child swapping; instances where a child enrolled with the service had a parent working for another service.

17. Mr Ismail gave evidence that a child was approved on the basis of material including a report from a psychologist (T10, pp 99-102). He acknowledged that the report specifies that the child does not meet the criteria for an approved condition, but stated that he saw this as a human rights issue and made a conscious decision to enrol the child. A further report of a psychologist dated 6 June 2018 (Exhibit A3) was produced, having been provided by the child’s mother to the Applicant following the notification of the ineligible sessions.

1. In relation to the ‘external’ swapping Mr Ismail stated that the service followed the guidelines and asked the relevant disclosure questions during enrolment. Parents were asked to notify the Applicant of any changes in their circumstances, and educators were instructed to monitor this. In response to the original breach allegations, the Applicant submitted that it had introduced declarations as to the inquiries made about eligibility (T8, p 66). Other submissions were made as to the limitations of the approved software system to detect swapping, and the potentially onerous task of going behind declarations, and it was stated that corrective action was taken, including refresher training for educators (T8, pp 67-68).

   Educators overseas

2. This category of breach arises when immigration movement data is cross-matched with records submitted by service providers. In these instances it is alleged educators could not have provided sessions of care as they were not present in Australia at the time.

3. Mr Ismail stated this was ‘the most disappointing thing’ when these breaches were advised. He explained that a system of checks was in place including weekly phone calls and monthly home visits. Corrective measures taken included purchasing software that provided electronic timesheets. In response to the original breach notification, the Applicant submitted that the number of sessions involved were a very small percentage of the overall services provided. Some of the sessions for one of the educators could have in fact been provided due to the time of departure (T8, p 70).

   Children overseas

4. As with the previous category, these alleged breaches are based on immigration movement records which indicate children were not in Australia at the time sessions of care were reported.

5. At the hearing Mr Ismail stated that care had been provided in the case of nine children on the day of departure. He stated that while time sheets were correct, there were some errors because of data entry problems with the reporting system. A two-step process was adopted in response, being education and process changes. It was submitted earlier, in response to the original breach notification, that the majority of alleged errors were for sessions within the ‘absence policy’ under the family assistance law (T8, p 75).

   Children 14 years or older and children at secondary school

6. These categories refer to the respective requirements under the No-one eligible Determination. In the original breach notification these categories are combined (T5, p 59).

7. Mr Ismail stated in evidence that he did not believe Chicho had breached this provision and that the service had collected the required information about the relevant individuals. Mr Ismail then stated that he considered five children had fallen under this category, and that he thought that the Department would raise this issue if it had concerns. In its submission in response to the original breach notification, the Applicant stated that it considered the relevant specified circumstances applied in the case of these particular enrolments (T8, p 78).

   Remaining s 219N breaches

8. Four further categories of breach were identified by the Respondent and are comprised of additional and further additional breach notifications: overlapping sessions of care; absences before care commenced; absences after care ceased; and, late attendance reporting.

9. Overlapping sessions of care refers to a situation in which a child is reported as receiving care at the same time by two different services. In its SFIC, the Applicant contends that there may be errors in reporting, and that evidence would need to be given at a hearing in relation to specific instances. In cross-examination, Mr Ismail affirmed his belief that the sessions raised in the breach notification were in fact provided by Chicho. He stated that Chicho had followed up in a number of instances with parents and that documents were submitted to substantiate these instances.

10. Absences before or after care sessions refers to an alleged breach of the requirement that absences have been outside the days permitted under s 10 of the Assistance Act. It is submitted in the Applicant’s SFIC, in respect of the original breaches, that one instance related to a session claimed on a public holiday and that, in the instances of sessions after care ceased, reports cannot be accurate until parents notify of the intention to cease care.

11. Instances of late reporting refers to a breach of the times required for submission of reports under s 219N of the Administration Act. It is submitted in the Applicants SFIC that issues relating to its business hours and use of the Harmony system led to the alleged breaches. In evidence at the hearing Mr Ismail stated that ‘timesheet day’ was a hectic affair in which educators came into the Chicho office, checked two weeks’ worth of data and it was entered into the electronic reporting system.

    Late enrolment reporting

12. The late enrolment breaches arise in relation to the specific reporting obligation found in s 219AB of the Administration Act. Mr Ismail stated in cross-examination that these instances arose due to an issue with the Department’s database. He stated that the enrolments had been approved but there was a delay in registration. When asked whether he disputed the breaches, Mr Ismail stated that he accepted these instances and that they had ‘the right intention’.

    Not provide educator CRN

13. The Eligibility Rules require care services to enter educator Customer Reference Numbers (CRNs) into the reporting system. It is submitted in the Applicant’s SFIC that these alleged breaches result primarily from the reporting system failing to comply with the legislative requirements. In re-examination at the hearing, Mr Ismail stated that he was unaware that these breaches had occurred while the service was still operating. Exhibit A2 is comprised of a blank educator application form and accompanying declarations which indicate that CRNs are required when registering new educators. In cross-examination, Mr Ismail stated the form was created by Chicho staff and while he stated the form had been updated, was unable to say when.

14. Exhibit A4 comprises 14 screenshots which the Applicant contends demonstrate that educator CRNs had been registered in the Harmony system, but could not be ‘seen’ by the Department’s information management system. Mr Ismail stated that these screenshots had been printed in July 2019 after the notification of the additional breaches, and following his arranging a three week window in which to regain access to the Harmony system.

    Educator-to-child ratios

15. Regulation 124 of the National Regulation specifies an educator may not care for more than seven children at any one time, of whom no more than four may be pre-school age or under. In respect of the original breaches, the Applicant’s SFIC states: The issue was identified by the Applicant but due to limited access to the Harmony system, it was unable to amend the sessions.

    CONSIDERATIONS

16. The issues to be resolved are whether the Applicant breached the operating conditions as alleged, and, if so, what the appropriate sanction is for such breaches.

17. I noted above the objection raised by the Applicant, particularly regarding the third category of breaches, raised prior to the hearing. Chicho’s representative submitted at the hearing that the material provided to substantiate breaches was accepted prima facie as departmental records and, to this extent, it would waive any argument as to prejudice arising from the late notification. As will be seen, concessions were also made in respect of numerous breaches.

    Breaches of s 219N

18. In relation to child swapping, Chicho’s representative acknowledged the breaches, but sought to distinguish them. It was submitted the breaches were not a result of recklessness or negligence. An earlier submission to the Secretary, following the original breach notification, also stated that the volume of breaches was low in the context of the service’s operations (T8, p 66).

19. It was submitted on behalf of the Respondent that in total the cost of the child swapping breaches amounted to an overpayment of benefits of $19,407.23. There was only one form of misreporting involved in this category of breach and the only relevant question was whether the undertaking under the relevant rules had been complied with. It was further submitted that the Applicant’s response to the enrolment of the child said to meet the disability exemption demonstrated the operator’s misunderstanding of its obligations.

20. In relation to educators overseas it was submitted on Chicho’s behalf that it accepted without reservation that the breaches had occurred, however it was unlikely that breaches would be repeated in the future. In relation to one educator, it was submitted that the sessions were provided, but by an education assistant, and the educator was subsequently terminated. In the other instances it was submitted the volume of breaches were limited in scope. It was acknowledged on the Respondent’s behalf that five of these sessions could have been delivered on the day of the educator’s departure. However, in respect of the other instances, the Applicant has the responsibility for reporting under the Administration Act.

21. Chicho’s representative submitted that the Applicant admitted without reservation that the children overseas breaches occurred. At the same time, it was submitted that data entry had been difficult and corrective measures had been put in place. It was submitted on behalf of the Respondent that it was accepted based on material submitted by Chicho that care may have been provided on the day of departure for a total of 16 sessions of care. It was submitted that the Applicant could not rely on the ‘absence policy’ in this category because there remained a reporting breach for care not provided, and the absences themselves were also not reported.

22. The breaches relating to children under 14 or in secondary school were disputed by the Applicant. The submission on behalf of the Applicant on this category consisted primarily of references to documents submitted by Chicho said to substantiate the exemptions that it stated applied to various instances of care and/or child. For the Respondent, it was submitted that, notwithstanding the material submitted in relation to exemptions, the grounds stated in s 9(2) of the No-one eligible Determination are cumulative and no evidence had been introduced to demonstrate that all grounds were made out. In particular, it was noted that the first element (being that a child cannot reasonably be left alone in the circumstances) was not satisfied in respect of the sessions. Overpayments of $25,878.22 resulted in relation to children over 14, and of $5,637.32 in relation to secondary school-aged children.

23. In relation to overlapping sessions of care, it was submitted on behalf of the Applicant that there was prejudice arising from the late notification. With respect to six instances it was submitted that, on the balance of probabilities, it should be accepted that the care was provided. However, it was also submitted that Chicho was prepared to take responsibility for the financial consequences of the alleged breaches. Consistent with the Respondent’s SFIC, it was submitted at the hearing that in relation to the six instances the preferable interpretation of the documents was that they do not substantiate that the care was provided. In respect of the further additional breaches, it was submitted that the potential for prejudice should not be given particular weight given that the Applicants record keeping obligation meant that it was within its power to provide appropriate substantiation. An overpayment of $821.53 arose from these breaches.

24. In respect of absences before and after care services were provided, and with respect to the original breach notification, it was conceded on the Applicant’s behalf in its SFIC and at the hearing that it was prepared to indemnify the Respondent for sessions on 10 of the days in question. It was also submitted that the Applicant was unable to investigate breaches advised after the cancellation took effect. It was conceded at the hearing that the Applicant accepted the original breach in relation to absence before care commenced. The Respondent acknowledged the concessions made, both in its SFIC and at the hearing, and submitted that the before and after care sessions amounted to overpayments (across all breaches) of $2,359.67, and $2,758.45 respectively.

25. It was submitted on the Applicant’s behalf that the majority of the late attendance reporting was one day late, and this was because the reporting date fell on a Sunday when the Chicho office was closed. Corrective measures were adopted to improve checking on ‘timesheet day’. However, it was also conceded that the Applicant undertook to be responsible for any financial loss. It was submitted for the Respondent that the obligation was to report prior to the relevant date, and in a number of cases arising in the further additional breaches, reporting was over one day late.

    Breaches of s 219AB

26. The Applicant’s representative submitted at the hearing that there were a range of reasons why the instances of late enrolment reporting occurred, including delays in the receipt of Centrelink clearances. It was considered informal enrolment until relevant documents were provided, however new procedures had been instituted. It was submitted that the Applicant would indemnify the Respondent for these breaches, but that no financial loss had been incurred. For the Respondent, it was submitted that the breaches notified covered a period of over two years, indicating a misunderstanding of the reporting obligation.

    Breaches of Eligibility Rules

27. It is contended in the Respondent’s SFIC (at [5.71]) that given the ‘frequent and serious non-compliance’ demonstrated by the breaches is a breach of the requirement under s 196(1) to meet the eligibility requirement for ongoing approval. In this case, it is submitted the Applicant does not meet the ‘suitable person’ test as set out in the Eligibility Rules by reference to the elements in s 7. It was submitted at the hearing on behalf of the Respondent that these breaches are not about an operator’s character or integrity, but concern the discharge of responsibilities under family assistance law. It was further submitted that the prevalence of breaches indicated that governance was poor and that material submitted in response to breaches was general, dealing with policies and not specific procedures.

28. It was submitted that the Applicant now understood that it was not appropriate for educators to commence without a CRN, and in future Chicho would wait until a number is provided. As noted above, the Applicant also relied upon an argument that there was an interface issue between reporting systems. On behalf of the Respondent it was contended that the evidence did not in fact establish there was such an interface problem. The screenshots tendered were not dated and the inference, it was submitted, should be drawn that the entries had not been made at the relevant time. It was also submitted these breaches constituted a breach of s 16A undertakings in the Eligibility Rules.

29. The document lodged by the Respondent summarising the breaches repeats the child swapping breaches under this subheading. These breaches are submitted to be a breach of s 16A(2) undertakings under the Eligibility Rules.

    Breaches of National Law / Regulations

30. It was submitted by the Applicant’s representative that the educator-to-child ratio breaches occurred some time ago, and it was also unable to investigate when parents failed to inform it, but they were unlikely to be repeated. However, it was also submitted that the breaches were not disputed and the Applicant offered to indemnify the Respondent. It is submitted in the Respondent’s SFIC that the Applicant did not make out an argument for any of the exceptions to the ratios permitted under the National Regulation applied in respect of the breaches.

    Summary

31. Taken together, the submissions on behalf of the Applicant demonstrate that Chicho has only fundamentally challenged two categories of breach: the sessions provided to children under 14 or in secondary school; and, the failure to provide educator CRNs. Concessions or proposals to accept financial responsibility through indemnity were made in respect of all other categories. As noted, it was further submitted that any assertion of prejudice on the part of the Applicant arising in relation to breaches advised following the cancellation decision was waived to the extent that the breaches are based on Departmental records. On behalf of the Respondent, a small number of sessions were conceded as having been provided among the educator overseas category.

32. By his own evidence Mr Ismail asserted that he was a consultant who advised on the operation of child care services. It also appears from his evidence that he was primarily involved in policy and what I would describe as general oversight of Chicho. His degree of involvement, and direction, has been inadequate. I accept that material was provided to the Respondent, prior to the application being lodged, responding particularly to s 219N breach notifications (this material is at T10-T16). I understand this material to have been referenced, but in broader terms, in the submissions made at the hearing. It demonstrates that there appear to have been systems and procedures in place at the service which I understand to be largely consistent with the Applicants obligations. Mr Ismail also appeared in his evidence to be sincere in his acknowledgment of the service’s obligations, and to be concerned about the implication that he was not a suitable person.

33. However, the submissions made on Chicho’s behalf highlight repeatedly that reporting errors were due primarily to failures on the part of those providing information to the service, or due to technology issues.  In one instance, a deliberate decision was made to enrol a child who did not meet specific disability related criteria. In relation to children under 14 or in secondary school, it was said in evidence that the Department might raise concerns if reporting was not accurate. In two categories of breach it was submitted that there were issues with the reporting system itself and/or with the Departmental system. The substantial number of sessions reported where educator credentials were not provided cannot be explained away in this manner. The evidence relied on was equivocal at best, and the volume of breaches points to inadequate governance.

34. I accept that there were a number of steps said to have been taken by the Applicant to remedy administration or procedure, including amendments to forms. However, the fact is that these processes should have been adequate in the first instance. I also accept that explanations were advanced in one form or another for the various categories of breach. However, the overall impression gained from the evidence is that, despite purported expertise of the business owner, there were critical weaknesses in administration and numerous failures of fundamental obligations.

35. Accordingly, I find that the Applicant committed the breaches alleged, save for the five sessions of educator overseas breaches conceded by the Respondent.

    Sanction

36. It was submitted on behalf of the Applicant that it had complied with laws and standards and provided explanations where it had tried to meet requirements, but failed. The operator was, it was submitted, a suitable person and if this was not found to be the case, this was because any business is prone to mistakes. The question was whether they were sustained, formed a pattern, were negligent, and the attitude of the person toward the errors. In summary, it was contended that the decision to cancel was harsh and should be set aside.

37. On behalf of the Respondent it was submitted that cancellation was the appropriate sanction. It was submitted the factors to be considered in the Breach Determination under s 4(1) are mandatory considerations. Here, the range of breach categories, the volume, and the monetary value of overpayments all demonstrate the seriousness of the Applicant’s conduct: it was incumbent on the Applicant to supervise and ensure that care was provided as reported; a lack of monitoring led to non-compliance; and, issues of governance in the past should give the Tribunal concerns about future conduct of the service. The inaccuracy of reporting raises, it was contended, concerns about the children in the care of the service. For example, breaches of the educator-to-child ratios are a very serious breach. It was also submitted that remedial measures taken by the Applicant neither exonerate Chicho, nor prevent future non-compliance. Finally, it was contended that s 4A of the Breach Determination is not binding, but should guide the Tribunal in identifying an appropriate sanction.

1. I consider that in applying s 200 of the Administration Act, I must consider the provisions of the Breach Determination. Relevant factors include: the severity of failure to comply with conditions for continued approval; the frequency of failures to comply; and, whether failures may threaten health or welfare of any child in the care of the service. The appropriate sanction is cancellation for ‘serious or frequent’ failure in the past.

2. In addition, there is a presumption in favour of cancellation where contravention involves ‘repeated’ breaches of s 219N. Repeated is defined as involving either 100 or more sessions reported inaccurately, or payments due to misreporting in excess of $5,000. Cancellation is also appropriate where there was false, misleading or otherwise inaccurate information about care where the session of care was not in fact provided (for example, educator or child overseas).

3. The total amount of sessions of care that were reported in breach of s 219N of the Administration Act is therefore 2,988. Breaches under s 219AB of the Administration Act total 179 instances for late enrolment reporting. The Eligibility Rules breaches include 23 instances of failure to report educator CRNs covering 28,369 sessions of care. The breaches of National Law/National Regulations comprise 63 hourly blocks. The total value of overpayments paid to the Applicant amount to $56,862.42.

4. I consider the submissions raised on the Applicant’s behalf insufficient to address the concerns arising from the seriousness and frequency of the breaches. As noted above, the evidence overall did not provide significant comfort that Chicho was administered in a manner enabling it to meet the standards required by the family assistance law. It is of particular concern that its principal asserted expertise in this field, but was, effectively, reliant on breach notifications to highlight where there were gaps in the service’s governance.

5. I am satisfied that the range and volume of breaches mean that they should be considered to have been serious and frequent. I am supported in this conclusion by reference to the definition of repeated breaches in s 4A. The total instances set out above, and the value of overpayments, indicate that breaches of conditions of Chicho’s operation were serious and frequent. This conclusion is unavoidable when taking into account the indicative inaccuracies and misreporting set out in s 4A, as they are far in excess of those thresholds.

   CONCLUSION

6. Accordingly, for the reasons given above, I consider that the breaches, subject to those sessions conceded by the Respondent, have been made out, and that the appropriate sanction is the cancellation of Chicho’s approval as a child care service under the family assistance law.

   DECISION

7. The Tribunal affirms the decision under review.

69.     I certify that the preceding 68 (sixty-eight) paragraphs are a true copy of the reasons for the decision herein of Dr Stewart Fenwick, Senior Member

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

Associate

Dated: 6 March 2020

Dates of hearing:	24 & 25 October 2019
Advocate for the Applicant:	Mr A. Rana
Solicitors for the Applicant:	Armanah Legal
Advocate for the Respondent:	Mr T. Galvin
Solicitors for the Respondent:	Maddocks Lawyers