Christian Community Ministries Ltd v Minister for Education and Early Learning

Case •

[2023] NSWSC 272

•

27 March 2023

No judgment structure available for this case.

Supreme Court


New South Wales

  • Summary available
  • Amendment notes
Medium Neutral Citation: Christian Community Ministries Ltd v Minister for Education and Early Learning [2023] NSWSC 272
Hearing dates: 14 March 2023
Date of orders: 27 March 2023
Decision date: 27 March 2023
Jurisdiction:Common Law
Before: Basten AJ
Decision:

(1)   Dismiss the further amended summons filed on 24 January 2023.

(2)   Order that the plaintiff pay the Minister’s costs of the proceedings in this Court.

(3)   Grant the parties liberty to apply on three days’ notice with respect to any consequential relief.

Catchwords:

ADMIINISTRATIVE LAW – judicial review – grounds – provision of financial assistance to non-government schools – discretionary power to recover funds from schools operating for profit – conditions of engagement of power – whether dependent on declaration that school non-compliant – power to recover part only of amount – whether Minister misapprehended scope of power

ADMIINISTRATIVE LAW – judicial review – grounds – review of fact-finding – unreasonableness – outcome not unreasonable – challenge to material fact, not jurisdictional nor essential to outcome

EDUCATION – non-government schools – government financial assistance – school operating for profit – funding continued – recovery of past payments made while school operating for profit

STATUTORY INTERPRETATION – criteria of engagement of power – whether criterion dependent on satisfaction of decision-maker where not stated but other criteria were – whether declaration as to present circumstances extends to past periods – use of present tense “is” – Education Act 1990 (NSW), Pt 7, Div 3

Legislation Cited:

Education Act 1990 (NSW), Pt 7, Div 3, ss 83B, 83C, 83D, 83E, 83F, 83J, 83K, 107

Evidence Act 1995 (NSW), s 91

Supreme Court Act (NSW), s 69

Uniform Civil Procedure Rules 2005 (NSW), rr 59.4, 59.9

Cases Cited:

Australian Conservation Foundation Inc v Forestry Commissionof Tasmania (1988) 19 FCR 127

CRI026 v Republic of Nauru [2018] HCA 19; 92 ALJR 529

Duncan v Independent Commission Against Corruption [2016] NSWCA 143

Kioa v West (1985) 159 CLR 550; [1985] HCA 81

Malek Fahd Islamic School Limited v Minister for Education and Early Childhood Learning [2022] NSWSC 1176

Minister for Immigration and Border Protection v SZUXN [2016] FCA 516

Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18

Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16

Minister for Immigration and Citizenship v SZRKT (2013) 212 FCR 99; [2013] FCA 317

Muggeridge v Minister for Immigration and Border Protection (2017) 255 FCR 81; [2017] FCAFC 200

Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6

Texts Cited:

M Aronson, M Groves, G Weeks, Judicial Review of Administrative Action and Government Liability (7th ed, 2022, Law Book Co)

Category:Principal judgment
Parties: Christian Community Ministries Ltd (Plaintiff)
Minister for Education and Early Learning (Defendant)
Representation:

Counsel:
PM Knowles SC / MT Sherman (Plaintiff)
SAC Patterson (Defendant)

Solicitors:
Holding Redlich (Plaintiff)
Maddocks Lawyers (Defendant)
File Number(s): 2022/00065859
Publication restriction: Nil

JUDGMENT

  1. BASTEN AJ: On 8 December 2021, the respondent Minister made a decision requiring that the plaintiff, Christian Community Ministries Ltd, repay to the New South Wales Government an amount of $3,856,286.36, being moneys received by it whilst it was operating for profit, and therefore ineligible to obtain Government funds. The Minister’s decision required that the amount be repaid by way of deductions from financial assistance which was otherwise payable to The Lakes Christian College (“the School”), commencing in 2022 and extending over a period of five years.

  2. By a summons filed on 7 March 2022, the plaintiff sought an order that the decision be set aside or quashed. The Court was informed that consent orders were made staying the deductions until 28 days after judgment is delivered in this proceeding, although no such order was entered on JusticeLink. A further amended summons was filed on 24 January 2023, introducing new grounds.

  3. There were seven grounds of review set out over some nine pages with extensive particulars. They were better described as prolix than succinct, but in seeking to comply with the requirement in r 59.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the grounds be identified “with specificity” they nevertheless failed to identify essential facts. As will be explained, an alleged failure to consider a mandatory consideration, or the erroneous taking into account of a prohibited consideration, requires that the consideration be identified with specificity. The grounds were not dealt with seriatim by the parties and will be addressed below in the order in which they were considered in submissions.

  4. Before turning to the grounds, it is convenient to identify the Court’s jurisdiction and provide a brief outline of the background to the recovery decision.

  5. For the reasons given below, the plaintiff has failed to make good its various grounds of challenge to the decision. Accordingly, the further amended summons filed on 24 January 2023 must be dismissed with costs.

Jurisdiction

  1. The scheme for financial assistance to non-government schools is found in Pt 7, Div 3 of the Education Act 1990 (NSW), comprising ss 83A-83L. The Minister’s decision to recover payments from the plaintiff was made under s 83J. Some decisions under the Education Act are subject to administrative review in the Civil and Administrative Tribunal (NCAT). A decision of the Minister under s 83J is not one of them. Accordingly, the proceedings in this Court are by way of judicial review pursuant to s 69 of the Supreme Court Act1970 (NSW). That requires the plaintiff to demonstrate that the Minister committed jurisdictional error in the exercise of her power, or, arguably, that there was an error of law on the face of the record.

  2. In relation to decision-makers, not being courts or tribunals, the concept of error of law on the face of the record is obscure. Section 69(3) of the Supreme Court Act states that the jurisdiction of the Court “includes, if the court is satisfied that the ultimate determination of a court or tribunal in any proceedings has been made on the basis of an error of law that appears on the face of the record of the proceedings”, extends to quashing the ultimate determination of “the court or tribunal”. The jurisdiction so expressed does not purport to be exhaustive, and, in replacing the jurisdiction to grant relief by way of the prerogative writs, s 69(1)(c) provides that the Court “shall continue to have jurisdiction to grant that relief or remedy or to do that thing” but that the relief be by way of judgment or order under the Supreme Court Act and the rules. However, the general law principles applicable to prerogative relief provide no greater scope for error of law on the face of the record where the decision-maker is an administrative officer. Aronson, Groves and Weeks have stated: [1]

“Australia’s common law of judicial review is primarily confined to the correction of errors that are ‘jurisdictional’ in the sense that the impugned decision is flawed by an error so great as [to] justify its invalidation.”

1. M Aronson, M Groves, G Weeks, Judicial Review of Administrative Action and Government Liability (7th ed, 2022, Law Book Co) at [580].

  1. Although it is said that certiorari is a remedy which goes further, and although s 69(4) extends the scope of the record to include the reasons for the ultimate determination, that is still “the reasons expressed by the court or tribunal”.

  2. Somewhat ambivalently, senior counsel for the plaintiff, having tendered a statement of reasons obtained from the Minister pursuant to a request under UCPR r 59.9, observed that the reasons might not be admissible as evidence, except to the extent that they contained admissions. [2] Both parties nevertheless assumed that an error of law appearing from the statement of reasons given by the Minister, or from the briefing material on which the Minister relied, or from the Minister’s letter to the plaintiff advising of her decision and recording its terms, would be reviewable by this Court.

    2. CRI026 v Republic of Nauru [2018] HCA 19; 92 ALJR 529 at [61] (Kiefel CJ, Gageler and Nettle JJ).

  3. This conceptual confusion (which is not limited to the parties to the present proceeding) need not be resolved: as will be explained, no error of law has been demonstrated by reference to any of the material just identified.

Background

  1. The Minister’s authority to provide financial assistance to non-government schools, under s 83B of the Education Act, is conditioned upon the school not operating for profit: s 83C. Section 83K establishes a Non-Government Schools Not-for-profit Advisory Committee (“Advisory Committee”) which is empowered to carry out investigations for the Minister, and to give advice and make recommendations to the Minister.

  2. On 14 July 2020 the Advisory Committee recommended that the Minister make a “declaration of non-compliance” with respect to, and impose conditions on the financial assistance payable to, the School. The recommendation followed an investigation into the operations of the School conducted by the Advisory Committee to determine the nature and extent of for-profit activity within s 83C of the Education Act. The Committee’s report covered the calendar years 2015-2020. The Committee’s concerns related to aspects of the relationship between the plaintiff, which was the “the proprietor” of the School, and the School itself, which operated through a company known as The Lakes Christian College Ltd (“TLCC”). In the years 2013-2014 (as to which the Committee made no recommendations), the plaintiff was found to be handling the financial management of the School so that it raised funds by way of commercial finance which it transferred to the School to cover operating losses. During the years 2015-2019, it was said that the plaintiff, which was the sole shareholder of TLCC, arranged payments to itself to service loans, arrangements for which were not the subject of a written contract. The Committee made a finding that the School operated for profit during the years 2015-2019, because payments made by the School to the proprietor were unreasonable given the receipt of Government funding, due to the lack of a written contract establishing the terms of the agreement and the lack of market value testing. For the years 2017-2019, the Committee found that the School operated for profit because it paid the plaintiff management fees which were unreasonable as the services provided were undefined and there was no record of the type and amount of services which were delivered.

  3. The Committee further found that in the years 2018-2020, payments were made by the School towards a loan held by the proprietor with respect to two adjacent pieces of land purchased by a related third party property trust. The payments were said to be equivalent to those which might be made by the owner of the land, but the School was not the owner, but a licensee. The Committee held that the School operated for profit in the years 2018-2020.

  4. Finally, there was a finding that the school transferred the School site to the same property trust in 2019 for no value. That was deemed to be a use of the assets not for the operation of the School and, on that basis, that the School and the proprietor operated for profit in the years 2019 and 2020.

  5. The recommendation of the Advisory Committee was reviewable by NCAT pursuant to s 107(1)(e2) of the Education Act. The plaintiff sought review by NCAT, the proceedings being resolved by agreement on 4 May 2021. Consent orders were made in the following terms:

“The parties have agreed to, and the Tribunal makes, the following orders:

1   The decision under review is set aside.

2   In substitution for that decision, the following decision is made:

The [Advisory Committee] makes the following recommendations to the Minister under sections 83K(2) and 83F(2)-(3) of the Education Act 1900 [sic]:

(a)   That non-compliance declarations be made in respect of [the School] for each of the following calendar years: 2017, 2018, 2019, 2020 and 2021;

(b) That pursuant to section 83E(1) of the Act, the conditions provided in [Annexure A to the consent orders] be imposed on the provision of future financial assistance to or for the benefit of the School.

3   The proceedings are discontinued with no order as to costs.”

  1. On 10 May 2021 the Minister wrote to the plaintiff advising that she had made a non-compliance declaration. The letter had three parts. The first, after setting out the terms of the NCAT consent orders in full, stated:

“Non-Compliance Declaration

Consequently, and in accordance with section 83F(1) of the Act, I declare that the School is a non-compliant school. I do so on the basis that the School operated for profit in the years 2017, 2018, 2019, 2020 and 2021 and I am satisfied that appropriate action can be taken in respect of the School under section 83E of the Act.”

  1. Both the proper construction of the declaration and its materiality were in issue in this proceeding. The plaintiff submitted that the declaration was contained in the first sentence set out above, using the present tense, and that the second sentence was merely an explanation for the finding and did not amount to a declaration that the School operated for profit in those years. On the plaintiff’s construction of the declaration, it related only to 2021. The plaintiff further submitted that the existence of a non-compliance declaration for a particular year was a condition of recovery of money paid by way of financial assistance in that year. Accordingly, recovery could only be undertaken for payments made in 2021.

  2. The second part of the letter advised that the Minister had followed the recommendation of the Advisory Committee as to the imposition of conditions on future financial assistance:

“Imposition of Conditions

In accordance with s 83F(4) of the Act, this Non-Compliance Declaration is conclusive evidence that the School is a non-compliant school and that grounds exist for the suspension or reduction of the provision of financial assistance in respect of the School, or the imposition of conditions on any such assistance. Accordingly, I adopt the recommendation as stated above and impose the conditions enclosed.”

  1. The conditions were in the terms attached to the consent orders made by NCAT. It is not necessary to set out the conditions, but it may be noted that part-payment of financial assistance was to be provided for the remainder of 2021 and full assistance was to be provided in 2022. Apart from the schedule of financial assistance for 2021, 2022 and “2022 onwards”, there were two aspects of the conditions which were relied on by counsel for the Minister. First, condition 45 stated, in part:

“By executing this document the School and/or Proprietor acknowledge and agree that:

…

45.2 under s 83J of the Act the Minister may recover any financial assistance previously paid to the Proprietor or the School during periods when it was operating for-profit or was non-compliant with the provisions of the Act…”

  1. Secondly, condition 15 required that the proprietor sign a letter of acknowledgement and publish it “in a prominent position in a newsletter published by the School”. The letter referred to the 2019 audit by the Advisory Committee and the transfers of property for nil consideration which were to be reversed.

  2. The third part of the Minister’s letter referred to the power conferred by s 83J(1) of the Education Act for the Minister to recover the amount of any financial assistance provided to or for the benefit of a school in respect of a period when the School was a non-compliant school. The letter recorded that from 1 January 2017 to 4 May 2021 the School had received an amount of $3,856,286.36 in financial assistance from the NSW Government. The Minister identified a number of statutory obligations and public interests in ensuring authorised use of Government funds and then stated:

“Show Cause

Before I make my decision regarding any possible recovery, I am providing you with an opportunity to make submissions as to whether recovery should occur, the timing and method of recovery of any financial assistance.”

  1. The plaintiff criticised this opportunity to make submissions on the basis that it did not expressly refer to the possibility of part only of the financial assistance being recovered. It also relied upon the statement as indicating that the Minister did not consider that her discretionary power extended to recovery of part only of the financial assistance. These submissions will be dealt with in due course.

  2. On 29 June 2019 the plaintiff responded in terms which in substance said that the manner in which the School had operated for profit during the relevant period involved an inadvertent contravention of the not-for-profit principles, involved no “malintent, no suggestion of fraud” and no suggestion of “any misappropriation or misdirection of funds”. The submission continued:

“It would seem reasonable that any recovery action taken would be limited to recovery of those funds which have been misappropriated.”

  1. The submissions explained why the non-compliance related to conduct “at the minor end of the range contemplated by s 83F” and why it would be “heavy handed” to engage in recovery of funding. The letter noted that “sanctions” had already been imposed (apparently referring to the conditions of future financial assistance) and, in the absence of misapplication of funds, recovery action would be “arbitrary and unreasonable”.

  2. By letter dated 8 December 2021 to the principal of the School, the Minister conveyed her intention to recover financial assistance from 2017 to 2021, pursuant to s 83J of the Education Act.

  3. In the course of submissions, that letter was scrutinised in an attempt to demonstrate that the Minister laboured under a misapprehension as to her legal powers. It will be necessary to return to the contents of the letter when addressing those submissions.

  4. Finally, after commencing the review proceedings in this Court, on 14 March 2022 the plaintiff made a request under the UCPR for a statement of reasons for the recovery decision. On 28 April 2022 a statement of reasons was provided. Again, because the reasons were scrutinised for indications of legal error, the contents of that document will be considered in the context of the particular submissions.

Evidence

  1. The background set out above has been taken from the documents tendered in the course of the proceedings, including a briefing for the Minister with respect to the proposed recovery decision approved by the Deputy Secretary on 3 December 2021. In addition to that material, there were two bundles of documents which were admitted subject to relevance. It is convenient to deal with those documents at this stage, although their relevance turned upon submissions made in the course of the hearing.

  2. The plaintiff read an affidavit of John Charles Lyndon, its chief executive officer. Mr Lyndon explained the financial arrangements between the School and the Minister relating to the provision of financial assistance. Exhibited to the affidavit were statements of the School’s bank account for the whole period from February 2017 until February 2021. The evidence was tendered for the purpose of demonstrating that the financial assistance was provided by way of a number of separate payments, rather than a single lump sum payment, or even a single lump sum payment each year. That fact was relied upon to demonstrate that it would have been open to the Minister to seek to recover sums less than the full amount, on the assumption that the Minister believed she had no power to recover other than the full amount of a particular payment.

  1. The fact that there were at least seven separate categories of payments made each year appeared from documents annexed to the briefing for the Minister. The actual amounts of the payments for the relevant years were also set out in the briefing. Some of the material annexed to Mr Lyndon’s affidavit could have been relevant if a particular ground relating to the breadth of the Minister’s discretion were upheld, but in that case the material would have been relevant to a reconsideration of the Minister’s decision, and not in relation to any issue capable of being resolved in this Court. Thus, further details with respect to the breakdown of payments and the times at which they were made were not relevant to the legal issue for determination by this Court: if error were established the matter would need to be remitted to the Minister. Accordingly, although the affidavit of Mr Lyndon was read without objection, I do not admit the annexures or the exhibit. (To the extent that some information was relevant, that material was otherwise in evidence.)

  2. The second set of documents admitted subject to relevance were three documents exhibited to an affidavit of Mary-Lou O’Brien, read on behalf of the Minister. The first document was a National School Reform Agreement prepared by the Council of Australian Governments, setting out the basis of the agreement for funding of schools by the Commonwealth and the States and Territories. The second document was a bilateral agreement between New South Wales and the Commonwealth on “Quality Schools Reform”. The third was a set of guidelines prepared by the New South Wales Government for Building Grants Assistance payable to non-Government schools. As counsel for the Minister helpfully explained, some of the background material covered by the documents had been the subject of questions from the court in another case and, if it became relevant, it was properly put before the court by way of affidavit evidence rather than by statements from the bar table. That course was entirely appropriate; however, no reference was made to that background material in the course of the hearing and it was not relevant to the issues to be determined by this Court. Accordingly, the tender is rejected.

  3. There was a further basis for rejecting the material referred to above. Although no doubt the Minister had available to her (and no doubt had knowledge of) each of the documents tendered by her counsel, and to the extent that the financial accounts were not addressed in the Ministerial briefing, she could have had access to the material from the plaintiff, none of that material was actually before the Minister, nor was there any evidence that it was relied upon by her in making the decision under review.

Legislative scheme

  1. Aspects of Pt 7, Div 3 of the Education Act are capable of different readings and were thus the subject of dispute between the parties. As the parties implicitly accepted, the resolution of constructional choices required reference to the purpose underlying the provisions. Even as to that, the parties were at odds. The plaintiff submitted that the underlying purpose was identified in the heading to the division, namely to provide financial assistance to non-Government schools. The Minister submitted that the purpose was encapsulated in the heading to s 83C, namely that financial assistance was not to be provided to schools that operate for profit. That dispute may be resolved by identifying the relevant statutory purpose as the provision of financial assistance to non-Government schools not operating for profit.

  2. The Minister placed emphasis on the importance of s 83C(1); the plaintiff submitted that that approach denied the significance of a qualification in subs (4). Relevantly, s 83C provides:

83C   Financial assistance not to be provided to schools that operate for profit

(1) The Minister must not provide financial assistance (whether under this Division or otherwise) to or for the benefit of a school that operates for profit.

…

(4) The Minister is not obliged to terminate the provision of financial assistance because of this section if, following an investigation under this Division, the Minister is satisfied that—

(a)   termination of financial assistance is not justified because of the minor nature of the relevant conduct, or

(b) more appropriate action can be taken under section 83E.

  1. There is no doubt that the obligation not to provide financial assistance under s 83C(1) is an important feature of the legislative scheme. Under s 83D the Minister has power to declare that a school operates for profit. Section 83D(6) states that the Minister’s obligation not to provide financial assistance to a school that operates for profit applies whether or not such a declaration has been made.

  2. As the plaintiff correctly observed, s 83C is expressed in the present tense: thus, the obligation not to provide finance is engaged when a school “operates” for profit, that is the school is operating for profit. By contrast, s 83D(1) provides that the Minister may declare that a school either operates for profit, or has operated for profit during a previous period, or both. The exercise of such a power results in a “for profit declaration”. The Minister did not make a for profit declaration in relation to the plaintiff; however, there was a dispute as to the significance of that fact, in circumstances where, when she made a “non-compliance declaration” under s 83F, the School was in fact operating for profit. The issue was relevant to the question whether the power to recover financial assistance which had been provided while the School was operating for profit was conditional upon a declaration under s 83D.

  3. Before turning to that issue, it is desirable to identify the basis on which the Minister in fact acted in this case. As noted above, the consent order made in NCAT included a recommendation by the Advisory Committee that the Minister make a non-compliance declaration under s 83F, and that she impose conditions on future financial assistance, pursuant to s 83E(1). That alternative course was provided under s 83C(4)(b).

  4. The plaintiff’s case was that recovery action could not be taken unless a declaration had been made either under s 83D (a for profit declaration) or under s 83F (a non-compliance declaration). In this case, a non-compliance declaration was made on 10 May 2021, but the plaintiff asserted that it was limited to the state of affairs then existing and did not apply to previous years. That meant that the Minister was not entitled to recover payments with respect to previous years. That issue will be addressed below: first, however, it is necessary to have regard to the terms of s 83E, under which conditions were imposed on the provision of future financial assistance. That section was also treated by the parties as explaining (if not defining) what was meant by the term, “non-compliant school”. Section 83E provides:

83E   Financial assistance to schools may be suspended, reduced or made subject to conditions

(1) The Minister may suspend, reduce or impose conditions on the provision of financial assistance (whether under this Division or otherwise) to or for the benefit of a school that is a non-compliant school.

(2)   A school is a non-compliant school if the Minister is satisfied that—

(a)   the school or the proprietor of the school has failed to provide reasonable assistance in relation to the conduct of any investigation of the school or proprietor under this Division, or

(b)   the school or the proprietor of the school has failed to comply with a direction of the Minister given under this Division to the school or proprietor, or

(c)   it is a non-compliant school because of any other circumstances set out in the regulations.

(3)   A school is also a non-compliant school if the school operates for profit, or has operated for profit, but following an investigation under this Division, the Minister is satisfied that—

(a)   termination of financial assistance to the school is not justified because of the minor nature of the relevant conduct, or

(b)   more appropriate action can be taken in respect of the school under this section.

(4)   If a school ceases to be a non-compliant school, the school is not entitled to any payment that was not made because it was a non-compliant school.

  1. As has been noted, the Minister used the power under s 83E(1) to impose the conditions which were annexed to the consent orders made in NCAT and had been prepared by the Advisory Committee. The critical aspects of s 83E for the present case were the explanatory (or definitional) provisions in subss (2) and (3). These provisions turn on the state of satisfaction of the Minister as to certain matters. Two things were said to flow from this: first, the availability of judicial review would be limited to the Minister’s state of satisfaction, rather than a determination of the objective facts. Nothing turned on that point because there was no challenge to the non-compliance declaration.

  2. Secondly, the plaintiff submitted that because the status of the School as non-compliant turned on the state of satisfaction of the Minister, the School was not non-compliant until she formed that state of satisfaction. That followed, the plaintiff submitted, from the use of the present tense in, for example, the chapeau to s 83E(2), “if the Minister is satisfied”.

  3. That analysis is less clear with respect to subs (3) which seems to engage an objective criterion in the chapeau, “if the school operates for profit or has operated for profit”, together with alternative criteria which are dependent on the Minister’s state of satisfaction.

  4. The drafting of subs (3) leaves something to be desired. The plaintiff’s submission in effect required that the criterion set out in the chapeau (namely, operating or having operated for profit) is to be read as the first matter as to which the Minister is to be satisfied, although it precedes the clarification introduced by “but”. Secondly, the terms of pars (a) and (b) suggest that the phrase “termination of financial assistance to the school is not justified” is the relevant criterion and the minor nature of the relevant conduct, or the more appropriate action, are alternative bases for termination not being justified. The same difficulty applies with respect to s 83(C)(4) which is reflected in the structure of s 83E(3).

  5. Thirdly, to the extent that s 83E(3) is intended to reflect the terms of s 83C(4), it appears that the first criterion (in the chapeau) goes further, because it includes the case of a school which “has operated for profit” (suggesting a closed period in the past which is not continuing), a circumstance which would not arise under s 83C because there would be no question of terminating financial assistance to a school which was no longer operating for profit.

  6. Finally, the satisfaction of the Minister, at least as to the terms of pars (a) and (b), can only be formed following “an investigation under this Division”. That phrase engages s 83K(2), which imposes relevant functions on the Advisory Committee. Nothing turns on that, because, first, there was no challenge to the declaration under s 83E and, secondly, action was taken under s 83E(1) pursuant to a recommendation of the Advisory Committee, following an investigation undertaken by it. That element was satisfied.

  7. To the extent that it is necessary to resolve the construction of s 83E, the plaintiff’s reading is, in part, to be accepted. That is, each of the elements in subs (3) is to be understood as dependent upon the state of satisfaction of the Minister. The effect of s 83E(2) and (3) would have been clearer if subs (3) had stated that a school was also non-compliant if, “the Minister was satisfied that the school operates for profit or has operated for profit”. However, because (i) each of the matters set out in subs (2) is for the satisfaction of the Minister, (ii) subs (3) supplements subs (2), and (iii) the matters identified in pars (a) and (b) are for the satisfaction of the Minister, the matters identified in the chapeau to subs (3) should be understood in the same way. The rest of subs (3) is a saving provision: that element of non-compliance is not excluded by satisfaction as to the circumstances specified in pars (a) and (b).

  8. However, because the status of the school is determined by the Minister, it does not follow that the school does not have that status until the Minister’s forms the relevant opinion. Nor does it follow that the Minister’s state of satisfaction cannot relate to past events. That it may is evident from the fact that both subs (2) and (3) include circumstances which have occurred in the past. The use of the present tense, namely that a school “is” a non-compliant school, does not mean that the school was compliant at the time in the past when it had failed to take some step, or had operated for profit. Such a construction would not promote the apparent purpose of the provision, but would tend to subvert it.

  9. This last consideration is not immediately relevant, because there was no challenge to the action taken under s 83E. However, it becomes relevant in relation to the next matter upon which the plaintiff placed reliance. That concerned the engagement and operation of s 83F, which provides:

83F   Declaration that school non-compliant

(1) The Minister may declare that a school is a non-compliant school (a non-compliance declaration).

(2) The Minister may make a non-compliance declaration only if the Advisory Committee recommends that the declaration be made because the school is a non-compliant school.

(3)   Any such recommendation of the Advisory Committee may include a recommendation on any consequent suspension or reduction of, or imposition of conditions on, the provision of financial assistance.

(4)   A non-compliance declaration in respect of a school is conclusive evidence that it is a non-compliant school and that grounds exist for the Minister to suspend, reduce or impose conditions on the provision of financial assistance in respect of the school.

(5) The Minister may revoke a non-compliance declaration at any time, and is to do so if the Advisory Committee advises the Minister, or the Minister is satisfied, that the school is no longer a non-compliant school.

(6) The Minister’s power under this Division to suspend, reduce or impose conditions on the provision of financial assistance to or for the benefit of a non-compliant school applies, whether or not a non-compliance declaration has been made and whether or not the suspension, reduction or imposition is recommended by the Advisory Committee.

Plaintiff’s case: statutory construction

  1. Insofar as the plaintiff’s primary statutory construction contention was that recovery action under s 83J required a declaration, relevantly under s 83F, that contention should not be accepted. However, before identifying why that is so it is helpful to return to the consent order made by NCAT which included a recommendation under s 83F(2) to the following effect:

“That non-compliance declarations be made in respect of [the School] for each of the following calendar years 2017, 2018, 2019, 2020 and 2021.”

  1. The plaintiff’s argument relied upon a chain of factors, namely that (i) recovery was only available in respect of a period when the School was a non-compliant school, (ii) it was only a non-compliant school when declared to be such, (iii) the declaration could only relate to a present status of the School (in May 2021) and (iv) therefore the Minister was not entitled to recover financial assistance paid in earlier years.

  2. On the plaintiff’s construction of s 83F, that course could not be taken, because the Minister could not make a declaration that the School “is” a non-compliant school with respect to years which had already been completed. The plaintiff submitted that, by contrast with s 83E(3), the use of the present tense in relation to a declaration was significant. That, it was submitted, was confirmed by the requirement in subs 83F(5) that the Minister is to revoke a non-compliance declaration if satisfied that the School is “no longer a non-compliant school”. The plaintiff accepted that it had not challenged (and indeed had assented to) the recommendation of the Advisory Committee. Nevertheless, it submitted that the recommendation must be read down in accordance with the powers conferred on the Minister: neither the recommendation, nor its consent, could override a statutory limitation on the power to make a declaration.

  3. Further, the plaintiff submitted that the Minister had implicitly accepted the force of its submission in making a non-compliance declaration in the terms set out at [16] above. The plaintiff submitted that the declaration was constituted by the first sentence. The second sentence, referring to each of the years 2017-2021, was either a reason for the current status being declared, or was directed to s 83F(4), identifying the grounds for the Minister to take action under s 83E(1).

  4. This submission failed to grapple with the language of s 83E(3) which provides that a school “is” a non-compliant school if it “has operated for profit”. It is clear that the Minister was so satisfied with respect to each of the relevant years and was also satisfied that it was appropriate to take action under s 83E(1). The School, on any view, was therefore non-compliant in each of the years she identified. Given the heading to the paragraph in which both sentences appear, they should be understood as making a declaration as to present non-compliance, on the basis of past operation for profit in the identified years. The fact that the School had operated for profit in each of those years was not challenged by the plaintiff; only the effect of the declaration was challenged and that challenge, in so far as it relied upon the construction of ss 83E and 83F, should be rejected.

  5. The declaration was, and could validly be, an expression in the continuing present tense. It is not necessary to consider the issues raised by a closed past period, where a school was non-compliant but no longer is. The factual arrangements in this case continued from year to year during the whole of the period 2017-2021.

  6. Finally, it is necessary to turn to the key provision permitting recovery of amounts of financial assistance, namely s 83J:

83J   Recovery of amounts from schools

(1) The Minister may recover the amount of any financial assistance provided by the Minister to or for the benefit of a school (whether under this Division or otherwise) if the financial assistance was provided in respect of a period when the school operated for profit or was a non-compliant school.

(2)   Any amount of costs under section 83I (3) that is not paid by a school or the proprietor of a school may be recovered by the Minister as if it were financial assistance provided under this Division to the school when the school was a non-compliant school.

(3) The Minister may recover an amount under this section—

(a)   as a debt in a court of competent jurisdiction, or

(b)   by reducing future amounts of financial assistance payable by the Minister to or for the benefit of the school concerned,

or both.

…

  1. It is now convenient to return to the plaintiff’s primary contention as to the proper construction of the Act. That was whether the Minister had the power to seek recovery under s 83J (by reducing future amounts of financial assistance), absent a for profit declaration under s 83D, or a non-compliance direction under s 83F. There is no express indication in s 83J that such a pre-condition exists. Nor is there any indication in the other provisions that it does exist.

  2. The Minister submitted that it was consistent with the obligation not to provide financial assistance to a school that operates for profit, that the right of recovery should extend to financial assistance paid to a school while it was operating for profit. There was an alternative course to the termination of payments in relation to a school that was operating for profit (under s 83C(4) and s 83E(1)) by continuing to make payments, even though the School was continuing to operate for profit. No doubt such payments would not be recoverable under s 83J, but that said nothing about the power to reduce future amounts by way of recovery of amounts of financial assistance wrongly paid in the past.

  1. That submission was supported by s 83D(6) which expressly provides that the obligation not to provide financial assistance does not depend on the existence of a for profit declaration. In relation to the alternative course available under s 83E with respect to a non-compliant school, s 83F(6) similarly states that the exercise of the power does not depend on a non-compliance direction having been made. It is true that neither of those provisions refers to s 83J, but s 83J is a freestanding power relating to periods “when the school operated for profit or was a non-compliant school”. That language is in marked contrast to the present tense used in other provisions. As a matter of statutory construction there is no reason to import into s 83J a precondition to its operation (namely, the existence of a declaration) which is simply not present in that section, nor in the sections providing for the making of the declarations. The implication of such an additional requirement would only be available if it were necessary to render the power intelligible, or for coherence with the purpose of the statutory scheme. Neither justification is engaged here.

  2. A similar conclusion was reached by Rothman J in Malek Fahd Islamic School Limited v Minister for Education and Early Childhood Learning. [3] However, Rothman J did identify a “clear and express condition precedent to the recovery of financial assistance provided in any relevant period”, namely, a recommendation of the Advisory Committee to the effect that a school is operating for non-profit or is otherwise non-compliant. [4] A number of provisions were relied on to support that finding. The sections referred to were not all to the same effect, but two related to the powers to make declarations (which are dependent upon a recommendation of the Advisory Committee) and three related to other matters. If the making of a declaration is not a precondition to recovery action, it is not easy to understand how a precondition to the making of a declaration becomes a precondition to recovery action. In any event, that matter need not be pursued because the Minister acted upon a recommendation of the Advisory Committee in making the declaration, as discussed further below.

    3. [2022] NSWSC 1176 at [188] and [288].

    4. Malek Fahd at [291].

  3. It follows that those aspects of the grounds of review based on construction of the legislative provisions, and relied upon to set aside the recovery decision, should be rejected.

Grounds 1A and 1B: reliance upon Advisory Committee recommendation

  1. Grounds 1A and 1B were addressed together by the parties, but invoked different forms of legal error. Ground 1A asserted that the Minister “erred in having regard to the findings and recommendations of the [Advisory Committee] in circumstances where the Committee’s decision had been set aside by [NCAT]”. Ground 1B asserted that the Minister had failed to accord the plaintiff procedural fairness in having regard to the findings and recommendations of the Advisory Committee without giving notice to the plaintiff that she might do so.

  2. It is by no means easy to identify the nature of the complaint in Ground 1A. While it is true that the initial decision of the Advisory Committee made on 14 July 2020 was set aside, it was replaced with a new recommendation forming part of the consent orders in NCAT, the effect of which was to vary the original decision so as to remove references to the years 2015 and 2016. It is true that the original recommendations were before the Minister and were identified as an annexure to the briefing for the Minister. In dealing with the facts which she had considered, the Minister (i) identified the 14 July 2020 recommendation, [5] (ii) referred to the effect of the consent orders, varying the recommendation for a non-compliance declaration so as to limit it to the years 2017 to 2021, [6] (iii) referred to the making of the non-compliance direction on 10 May 2021 in relation to the years 2017 to 2022, reflecting the NCAT orders and (iv) noted that conditions had been imposed in accordance with those annexed to the orders. [7] The Minister then referred to the show cause letter and the submissions of the School, which she summarised. [8] In the statement of reasons at par 5.4, the Minister stated:

“I accepted the findings and recommendations of the Committee so far as they relate to the calendar years 2017 to 2021. I note that those findings were undisturbed as part of the NCAT proceedings and, following the mediation before NCAT, the College consented to the Committee recommending the making of a non-compliance declaration for those years.”

5. Statement of reasons, 28 April 2022, par 4.1.

6. Ibid, par 4.2.

7. Ibid, pars 4.3, 4.4.

8. Ibid, pars 4.5, 4.6.

  1. Self-evidently, the Minister’s s 83J decision was not based in any sense upon so much of the Advisory Committee’s recommendations of July 2020 as referred to the years 2015 and 2016. The findings with respect to those years also fell away with the making of the consent orders by NCAT. The Minister’s reasons demonstrated a correct understanding of the procedural history. To act on the amended recommendation she was permitted, and arguably required, to have regard to any relevant findings. In the absence of evidence that she relied upon findings relevant only to the years 2015 and 2016, I am not satisfied that she did.

  2. Assuming, however, that she did have regard to findings with respect to the earlier years, the plaintiff’s submissions did not explain why the Minister was prohibited from doing so. As explained by Burchett J in Australian Conservation Foundation Inc v Forestry Commission of Tasmania,[9] there is no legal error in a decision-maker picking up a red herring, turning it over and examining it, and then putting it down, so long as it does not affect the decision. That is clearly what the Minister did in the present case. However, even if that were not the correct inference from the evidence, there is nothing in the Education Act which would prohibit the Minister from having regard to factual findings in support of a recommendation which had been set aside. Those findings might be relevant to recommendations regarding later years, or might inform the Minister’s understanding of why the Advisory Committee had made a recommendation in relation to a later year. That in turn might be relevant to the Minister’s decision as to whether or not to make a declaration in the terms recommended by the Advisory Committee. The Advisory Committee itself might have declined to make a recommendation in relation to 2015 and 2016 (which was the effect of the consent orders) but have relied upon findings made with respect to those years in order to support its recommendations with respect to later years.

    9. (1988) 19 FCR 127 at 135.

  3. Because ground 1A did not identify in terms the nature of the prohibition on having regard to such material, and because the plaintiff’s submissions took that issue no further, there is no basis for setting aside the Minister’s decision on that ground.

  4. Further, neither ground 1A, nor ground 1B, identified the “findings” of the Advisory Committee which were said to have been relied upon. Similarly, neither ground identified the “recommendations” which were erroneously taken into account. It is self-evident that the recommendations the subject of the consent orders, were not only taken into account but were conditions to the engagement of the Minister’s power to make a declaration under s 83F (the making of which is not challenged). If ground 1A were intended to relate to those recommendations, it would be manifestly untenable. The same should be said with respect to the findings in support of those recommendations. The purpose of requiring an investigation and report by the Advisory Committee is to inform the Minister in relation to the exercise of discretionary powers. A recommendation without findings would not be a sensible basis for informing the exercise of a power. It should not be accepted that the statute would require that course.

  5. It appeared in the course of the appellant’s reply (though only by implication) that the challenge was only to the Minister having had regard to the findings and recommendations with respect to 2015 and 2016, which had been set aside. However, the reply also stated that it was “clear from both the decision and the reasons that the Minister treated the determination of the Advisory Committee as if it were undisturbed”. [10] There was no tenable factual basis for that submission. Nothing in oral argument took the matter any further. Ground 1A was inadequately pleaded, but on any available reading it must be rejected.

    10. Plaintiff’s submissions in reply, 10 March 2023, par 11.

  6. Ground 1B identified in the “show cause” passage in the Minister’s letter of 10 May 2021, a failure to invite the plaintiff to respond to the possibility that “a factor that the Minister may take into account may be the fact of the Committee’s recommendation or its findings that had been set aside”. [11]

    11. Tcpt, 14/03/23, p 20(5).

  7. The terms of the “show cause” passage have been set out at [21] above. In effect, the error is said to lie in the failure of the Minister to identify all of the material she might take into account in deciding whether to seek to recover the amount of financial assistance provided during the identified years. She did, however, identify the years, the sum in question, and the factors that she would take into account including the public interest in seeing that “non-Government schools receiving financial assistance take seriously their not-for-profit obligations”.

  8. Although the ground was not formulated in these terms, nor were the submissions so directed, I infer that the element of procedural fairness in issue was the opportunity to respond to adverse material which may be relied upon by the decision-maker. That requires careful attention to the specific material identifiable for that purpose and the manner in which it was relied upon adversely to the plaintiff. The ground so identified has a long heritage, relevantly stretching back to Kioa v West. [12]

    12. (1985) 159 CLR 550 at 629 (Brennan J); [1985] HCA 81.

  9. In circumstances where the adverse material was said to be findings of the Advisory Committee, these findings were well known to the plaintiff, as they had been the subject of the NCAT proceedings brought by it challenging the recommendations. Assuming that findings which supported the 2015 and 2016 recommendations might not be expected to be relied upon in relation to non-compliance in later years, it was incumbent upon the plaintiff in the course of this proceeding to identify the impugned findings and explain why they were adverse to its interests. At no stage did the plaintiff engage in that exercise.

  10. Further, as the Minister submitted, the plaintiff responded to the show cause notice in precisely the way that might have been expected, whether or not more detail as to the available material had been disclosed. Thus, the submission of 29 June 2021 asserted that the Department had accepted “during our discussions” that “any non-compliance was either technical or minor in nature”. The submissions pointed out that the offending property transfer had been “rectified to the satisfaction of the Secretariat”. It was submitted that “at no time was the property used for any purpose other than the operation of the School and there is no evidence of an intention to escape any obligations [the plaintiff] has under the Education Act”. The submissions then turned to the “remaining concerns”, referring to “either a perception of inadequate policies or to a perception of related party transactions due to an incorrect understanding of our organisational structure”. This language appeared to reflect the findings with respect to non-compliance made in two brief paragraphs at the end of the Advisory Committee report. The suggestion that the Secretariat had accepted that the breaches were minor in nature may be sourced to the conclusions reached by the Advisory Committee. In her reasons, the Minister summarised the submissions. At no stage did the reasons suggest there were earlier (or other) findings which retained significance and had been taken into account.

  11. The plaintiff has not demonstrated that there was any breach of procedural fairness by not drawing to its attention the possibility that the Minister would have regard to findings of the Advisory Committee relevant to the recommendations on which she had acted. As there was no evidence to support the inference that she had regard to findings as to recommendations which were not within the scope of the consent orders, no question arises as to the failure to disclose findings in support of those recommendations.

  12. Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [13] was a case in which the applicant said that procedural fairness arose from the failure of a departmental officer to contact a particular witness, having agreed to do so. Gleeson CJ stated:

“22   The applicant was unable to point to any additional information, or any argument, that might have been put before the respondent if there had been contact between the Department and Ms Tran following 7 November 2000, or if the applicant had been told that there would be no such contact. There is nothing to justify a view that, considered objectively, proper decision-making required further contact with Ms Tran.”

13. (2003) 214 CLR 1; [2003] HCA 6.

  1. In short, the lost opportunity was not shown to have caused any detriment to the applicant. Gleeson CJ continued:

“37   A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations. … A particular example of such detriment is a case where the statement of intention has been relied upon and, acting on the faith of it, a person has refrained from putting material before a decision-maker. In a case of that particular kind, it is the existence of a subjective expectation, and reliance, that results in unfairness. Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”

  1. The evidence in the present case does not demonstrate that (i) there was any adverse material relied upon by the Minister of which the plaintiff was not aware; (ii) that such adverse material as may have been relied upon was not answered by the submissions in fact made by the plaintiff; and (iii) that the plaintiff was under a misapprehension as to the nature of the material which would be relied upon. Rather, the evidence allows an affirmative finding that the plaintiff was aware of, and responded to, so much of the findings of the Advisory Committee as it wished to respond to and, in other respects, relied upon those findings.

  2. Ground 1B must be rejected.

Grounds 1 and 2: failure to have regard to the effect of the non-compliance declaration

  1. These two grounds, which were also dealt with together by the parties, again involved two discrete forms of error. Ground 1 contended that in making the recovery decision, the Minister had failed to have regard to the fact that she had made a declaration of non-compliance. The final particular in the further amended summons with respect to this ground read as follows:

“In making the Recovery Decision, the Minister failed to have regard to the circumstance that she had declared the School to be a ‘non-compliant school’ within the meaning of s 83E(3) and pursuant to s 83F, rather than making a for profit declaration in respect of the School pursuant to s 83D.”

  1. Ground 2 alleged that the recovery decision was “legally unreasonable”, relying upon the same particulars.

  2. If the declaration itself were not a precondition to the making of the recovery decision, it is not clear why a declaration that was made should be a mandatory consideration in determining whether or not to seek recovery of financial assistance paid for years in which the School had been operating for profit. However, assuming that it was a mandatory consideration, there is no doubt that the Minister was aware of it and had regard to it. What she did not do was accept the plaintiff’s contention that it, and the orders under s 83E(1), were sufficient to remedy the breaches of the Act. That is not of itself a ground of judicial review.

  3. These two grounds therefore turn on whether there was merit in the contention that the making of the recovery decision was unreasonable.

  4. The answer to this contention lies in the discussion of the statutory scheme set out above. Although not necessary to trigger the Minister’s obligation not to provide future financial assistance to a school that operates for profit, it is doubtful that a for profit declaration under s 83D has any function until court proceedings are initiated. In any event, such a declaration would not entitle the Minister to impose conditions pursuant to s 83E(1). That is the step that the Minister wished to take, thus permitting grants of financial assistance to continue. A non-compliance declaration was not necessary for that purpose, but it was entirely consistent with that purpose. Further, should the Minister think it appropriate to take steps to recover financial assistance in a court of competent jurisdiction, the declaration would provide conclusive evidence that the School was non-compliant and that there were grounds for the Minister to take the steps she took under s 83E. Accordingly, a recovery decision could properly have been made whichever declaration was made and, on the reasoning accepted above, in the absence of any declaration. In those circumstances, there was no legal unreasonableness in the decision to seek recovery of past financial assistance payments.

  5. At one point in oral submissions, the case was put in practical terms, namely that the continuation of payments of financial assistance was effectively subverted by the proposal to recover past financial assistance over a period of five years by deductions from amounts which would otherwise have been paid to the School. Whether that was factually correct was not explored in the evidence. Common sense might suggest that the amounts paid between 2017 and 2021 were likely to be smaller than the amounts payable between 2022 and 2026.

  6. Further, the practical consequence is irrelevant in circumstances where the Minister could have taken the step of suing for a debt in a court of competent jurisdiction which would have resulted in a judgment requiring that the School repay the money forthwith. Supposing some arrangement to pay by instalments were made, the effect would be similar to that achieved by reliance on the alternative method adopted by the Minister, although the School might be worse off, because the judgment would carry interest.

  7. The recovery decision was not itself unreasonable viewed in isolation. The School had obtained financial assistance in years in which it was not eligible. Whatever other steps the Minister might take or have taken, a decision to recover payments was not legally unreasonable.

  8. Grounds 1 and 2 must be rejected.

Grounds 3 and 6: construction and application of the discretion under s 83J(1)

  1. It may be noted that there was no ground 5 and that ground 4 was addressed by the parties alone and last.

  2. Ground 3 turned on a construction of s 83J which has already been adverted to in considering the legislative scheme. The plaintiff submitted that the Minister approached the exercise of her discretion “on the basis that the provision did not permit her to recover an amount of financial assistance which was less than the full amount of financial assistance provided … in respect of a period when the School was a non-compliant school”. Ground 6 was complementary, stating that the Minister failed to identify the relevant amounts of financial assistance provided during the course of the five calendar years, either by way of 16 separate amounts or, in the alternative, by way of five separate amounts (that is one amount per year). The same error of construction was relied upon as that identified in ground 3.

  1. The point of construction underlying these grounds was that the Minister’s discretion as to recovery was unconstrained, except as to an upper limit, being the amount erroneously paid. There was no obligation to seek to recover all, or none at all. That construction should be accepted: recovery of part of the amount only was an available option. (It is difficult to understand on what basis anyone could have thought otherwise.)

  2. The submissions in support of these grounds relied on two propositions. First, and conventionally, by reference to the Minister’s letter conveying her decision and the statement of reasons provided subsequently, it could be inferred that the Minister acted on the premise that only two courses were open to her, that is either to recover the full amount of the payments or to recover nothing. For reasons which will be outlined shortly, neither text supports the inference sought to be drawn.

  3. The second basis of the submission was somewhat unusual. It relied upon submissions made in an earlier case in this Court, Malek Fahd,[14] and the contemporaneity with the decision under s 83J in the present case. It is convenient to address this matter first.

    14. See fn 3 above.

  4. The hearing in Malek Fahd took place on 21 April 2022. As recorded by the trial judge in that matter, the show cause letter was sent on 28 May 2020. [15] A further letter was sent by the Minister requesting information regarding a possible recovery of financial assistance under s 83J(1) on 11 November 2020. [16] The decision to seek recovery was made on 5 March 2021, [17] two months before the show cause letter sent in this case.

    15. Malek Fahd at [22].

    16. Ibid at [29].

    17. Ibid at [36].

  5. Rothman J rejected a submission by the plaintiff that the phrase “the amount of any financial assistance” allowed a dollar-by-dollar assessment for the purposes of considering recovery. [18] Although the judge did not accept that submission, he did accept that the provision was intended to allow the Minister to recover “each amount of financial assistance” or all of the amounts provided. In discussing the Minister’s reasons, Rothman J observed that she had stated (or implied) that “the primary or ordinary position was that all of the financial assistance provided … should be recovered”. [19] However, the judge further stated that “the Minister prefers the view that, once the Minister has exercised the discretion to recover financial assistance, the legislation requires all of the financial assistance to be recovered”. On the other hand, the judge continued, [20]

“… the Minister also turned her mind to the submission of the School that the Minister should exercise a discretion to recover an amount less than all of the financial assistance provided which was, in the submission of the School, the amount of not-for-profit activities that had not been recovered in subsequent years. In relation to that latter aspect, the Minister took the view that, if there were a discretion, it would be exercised for the recovery of all the financial assistance.”

18. Ibid at [201].

19. Ibid at [221].

20. Ibid at [222].

  1. I read the passage in the Minister’s letter of 5 March 2021 to the Malek Fahd Islamic School, [21] as dealing with a submission that only so much of the financial assistance should be recovered as was “commensurate with the amount of financial assistance spent on ‘for-profit’ activities”. The Minister rejected the proposition that the Act required such a limited recovery and, as a matter of discretion, rejected the submission that anything less than the full amount of the financial assistance should be recovered.

    21. Ibid at [37].

  2. In any event, the relevance of any finding of fact made by another judge in another case in October 2022 is unclear. The gravamen of the submission in this Court appeared to be that the view taken by the Minister in writing to the Malek Fahd Islamic School on 5 March 2021 must have reflected her view as to the scope of her discretion when she advised the plaintiff of her decision under s 83J on 8 December 2021. Alternatively, it reflected her view at the time that the statement of reasons was provided on 28 April 2022.

  3. In so far as the submission relied upon a factual inference drawn in the judgment in Malek Fahd as to the Minister’s view as to the scope of her discretion, the submission is misconceived. First, I am not sure that Rothman J drew the relevant inference, but if he did, based upon the extract from the letter of 15 March 2021 referred to in the judgment, I would not draw that inference. Secondly and critically, this Court draws inferences on the basis of the evidence before it. The judgment of another court, including a finding of fact in a judgment, is not admissible to prove the existence of a fact in this proceeding: Evidence Act 1995 (NSW), s 91. There was no evidence tendered in this proceeding relating to what the Minister told another school. Accordingly, grounds 3 and 6 must be, and will be, addressed by reference to the Minister’s letter and the statement of reasons which are in evidence in these proceedings and relate to this case.

  4. The Minister’s letter of 8 December 2021 identified her decision as one “to seek recovery of all the financial assistance paid …”. The letter referred to the School’s submission that recovery should be limited “to the amount of misdirected funds”, amongst other matters. The letter stated that “recovery is not limited to the amount of misdirected funds” responding to the submission that it should be so limited. The Minister referred to the School’s actions in rectifying past transactions and the continuing work on the conditions, which was welcomed, but said that “these do not offset the consideration for the repayment of financial assistance”.

  5. The reference to recovery of the “full amount” of the financial assistance is at least consistent with the possibility that less than the full amount might be recovered. Otherwise, there is nothing in the letter which demonstrates a misunderstanding of the breadth of the discretionary power.

  6. In reasons provided on 28 April 2022 the Minister stated:

“6   Notwithstanding that the College operated for profit in the calendar year 2021, I decided not to seek full recovery in that year and did not seek recovery of funds paid after 4 May 2021 ….

7 … Under section 83J of the Act, recovery is not limited to the amount of misdirected funds. I considered that s 83J permits recovery of the full amount of financial assistance provided during the period for which the school was non-compliant, and that it was appropriate to recover the full amount for the reasons given above.”

  1. There is no doubt that the Minister understood that the power was discretionary and that it extended to (permitted) recovery of the full amount. She also recognised that in 2021, the full amount was not being recovered. There is simply no basis in these reasons for inferring that the Minister laboured under a misconception as to the scope of her discretion. It would, in any event be a somewhat extraordinary misconception. It is implausible that, without hinting in the letter or the reasons that she was restricted to recovering the full amount or none of it, she nevertheless held what might be considered an unexpected view of powers, which found no support in the statutory language.

  2. Grounds 3 and 6 must be dismissed.

Ground 4: incorrect attribution of School’s operating surplus and cash position

  1. The Deputy Secretary annexed to her briefing to the Minister a copy of the plaintiff’s financial report for 31 December 2020. The report dealt separately with the accounts of the “parent entity” (the plaintiff) and what were described as “controlled entities”, which included a property trust, a company known as Christian Education Services Limited, the Christian Youth Council (Burleigh Heads) and two other college companies. It identified the directors (apparently in relation to both the plaintiff and the various controlled entities), the principal activities of “the group” and the principal activity of the CCM central office. The briefing note referred to the “2020 audited financial statement” and observed:

“The school’s financial statement (up to and including 30 December 2020) provided by the school indicates a surplus before income tax of $15,770,035 with cash of $2,604,578.”

  1. How these figures and the accompanying accounts were taken into account by the Minister (and if they were taken into account) is by no means clear. They were not referred to in the Minister’s letter of 8 December 2021. Nor were they referred to in the statement of reasons. I will infer, favourably to the plaintiff, that they were taken into account in determining to recover the outstanding sum by way of instalments over five years. However, that conclusion does not mean that they were used adversely to the interests of the plaintiff.

  2. The thrust of the plaintiff’s submission was that the briefing to the Minister relied upon figures taken from the consolidated entities’ accounts, rather than the accounts of the plaintiff. There were three questions which arose from that submission, namely (i) whether the “error” made any difference; (ii) why it was an error; and (iii) why it was not simply a mistake of fact (if it were a mistake), rather than an error of law.

  3. As to the first question, the surplus for the year after income tax (there being no tax payable) showed the assets of the plaintiff as $15m (which was 95% of the consolidated accounts) and cash and cash equivalents as $2.6m in the consolidated accounts and $1.13m for the plaintiff separately. That was a significant difference in the latter figures, but it remained the case that the plaintiff had cash in excess of $1m, and indeed had had double that amount of cash in the previous year. There was no evidence to support an inference that the cash differential had any bearing on the capacity of the plaintiff to forego the amount to be recovered two years later in 2022 and thereafter.

  4. As to whether it was erroneous to look at the consolidated accounts, note 1 to the accounts stated that the consolidated financial statements were for the plaintiff and its controlled entities, with separate statements for the “parent entity”, the plaintiff. The plaintiff did not refer to any evidence indicating the extent to which the resources of its subsidiaries were or were not available to the plaintiff with respect to the operation of the School. Note 3, discussing “principles of consolidation” stated that “[c]ontrol exists where the parent entity has the power to govern the financial and operating policies so as to obtain benefits from its activities”. Note 3 referred to note 22 (actually note 21) which identified the percentage of each of the controlled entities owned by the parent (the plaintiff). In relation to the School in 2019 it was 100%; in 2020 it was nil. The Court was informed that in the course 2020 the School had been subsumed into the parent company by a process not revealed in the evidence.

  5. Without further evidence, the Court is not in a position to know whether reliance on the financial situation of the consolidated group was an inappropriate way to measure the resources available to the plaintiff. Accordingly, error has not been established.

  6. As to the third question, assuming that there was an error, it was patently one of fact. It was not one of primary fact (the briefing note correctly identified figures from the plaintiff’s accounts) but as to an inference which may or may not have been drawn from those facts. The inference was not pleaded but must have been to the effect that, the Minister was satisfied that, spread over five years, the School would be able to afford the repayments by ay of reduction of financial assistance.

  7. The Minister’s reasons did not disclose that she drew such an inference. At best, it might be inferred that, acting reasonably, she would have formed a view as to the degree of hardship likely to be imposed on the School by an order for recovery of the payments. The reason the Minister did not address the issue in terms was because the School made no submission as to its inability to make the repayments over time. So much was conceded. [22]

    22. Tcpt, 14/03/23, p 33(35)-(40).

  8. The plaintiff submitted that an error of fact could be the subject of judicial review if, in the circumstances, it could “infect the reasoning [so as] to become legal error”. [23] The plaintiff called in aid a passage in the reasoning of the Full Court of the Federal Court in Muggeridge v Minister for Immigration and Border Protection,[24] and submitted that “where a particular factual finding is irrational or illogical or unreasonable and that impugned finding is one which is material to the ultimate outcome, error of the type identified, that is legal unreasonableness, may be established”. [25]

    23. Tcpt, p 65(48).

    24. (2017) 255 FCR 81; [2017] FCAFC 200 at [36] (Charlesworth J, Flick and Perry JJ agreeing), quoting Wigney J in Minister for Immigration and Border Protection v SZUXN [2016] FCA 516 at [55].

    25. Tcpt, 14/03/23, p 66(2).

  9. The passage relied upon did not support the plaintiff’s case. In substance, it summarised earlier reasoning of Robertson J in Minister for Immigration and Citizenship v SZRKT,[26] answering a question as to whether grounds alleging illogicality or irrationality apply only to the outcome, being the decision itself. Robertson J stated that the majority reasons in Minister for Immigration and Citizenship v SZMDS [27] “do not support a focus limited to the end result, albeit the overarching question is whether the decision was affected by jurisdictional error”. Robertson J noted that such grounds provided a basis for judicial review “of a decision as to a jurisdictional fact”. [28] There are important differences between a fact which is merely “material” (that is, relevant), one which is “essential” (a necessary step in the reasoning to the conclusion) and one which is “jurisdictional” (the existence of which is a condition of engagement of a power). In this case the only “jurisdictional fact” was the Minister’s opinion.

    26. (2013) 212 FCR 99; [2013] FCA 317 at [147]-[151].

    27. (2010) 240 CLR 611; [2010] HCA 16 at [130]-[131] (Crennan and Bell JJ).

    28. SZRKT at [152].

  10. The plaintiff’s written submissions sought support in the reasons of Bathurst CJ in Duncan v Independent Commission Against Corruption [29] where, after referring to the reasoning of the High Court in Minister for Immigration and Citizenship v Li,[30] the Chief Justice stated:

“287   In my opinion, the decision in Li, particularly with its emphasis on the fact that the power conferred on a decision-making authority must be exercised according to law and to reason and within the limit of the subject matter, scope and purpose of the statute, is consistent with the proposition that a decision on factual matters essential to the making of a finding by a decision-maker (in this case a finding of corrupt conduct), can be reviewed on the basis that the reasoning which led to the decision was irrational or illogical irrespective of whether the same conclusion could be reached by a process of reasoning which did not suffer from the same defect.” (Emphasis added.)

29. [2016] NSWCA 143 at [287].

30. (2013) 249 CLR 332; [2013] HCA 18.

  1. The statements of principle may be accepted: they do not assist the plaintiff. There was no jurisdictional fact in issue; the plaintiff did not identify any fact “essential” to the process of reasoning of the Minister; the outcome was not said to be legally unreasonable. Rather, reliance was placed upon the inclusion in a briefing note of one piece of evidence, rather than another, in circumstances where the plaintiff’s submissions did not rely upon inability to pay (the only matter to which the evidence might have been relevant), and which the Minister did not expressly refer to in her reasons. Ground 4 is without substance and must be dismissed.

Conclusion

  1. The plaintiff having failed in each of its challenges to the validity of the Minister’s decision under s 83J of the Education Act, the further amended summons must be dismissed. The plaintiff must pay the Minister’s costs.

  2. As noted above, the Court was informed that there was a stay in place which would lapse 28 days after judgment was delivered. Although the stay was said to have been by way of a consent order, no such order has been entered on JusticeLink, probably because the document has not been filed. (The change in the Minister’s title was also the subject of a consent order which has not been filed, but should be.) If any further order is required, the parties have liberty to relist the matter before me on three days’ notice.

  3. The Court makes the following orders:

  1. Dismiss the further amended summons filed on 24 January 2023.

  2. Order that the plaintiff pay the Minister’s costs of the proceedings in this Court.

  3. Grant the parties liberty to apply on three days’ notice with respect to any consequential relief.

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Endnotes

Amendments

19 April 2023 - "Amended summons" changed to "further amended summons" in Order (1), pars 2, 5, 77, 113, 115(1).

Decision last updated: 19 April 2023

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Cases Cited

16

Statutory Material Cited

4

Azriel v NSW Land & Housing Corporation [2006] NSWCA 372
Azriel v NSW Land & Housing Corporation [2006] NSWCA 372
CRI026 v The Republic of Nauru [2018] HCA 19