Claredale Academy Pty Ltd and Australian Skills Quality Authority
[2019] AATA 1869
•12 July 2019
Claredale Academy Pty Ltd and Australian Skills Quality Authority [2019] AATA 1869 (12 July 2019)
Division:GENERAL DIVISION
File Number: 2017/3118
Re:Claredale Academy Pty Ltd
APPLICANT
AndAustralian Skills Quality Authority
RESPONDENT
File Number: 2017/3119
Re:Claredale Academy Pty Ltd
APPLICANT
AndSecretary, Department of Education and Training
RESPONDENT
Decision
Tribunal:Member K. Parker
Date:12 July 2019
Place:Melbourne
The Tribunal affirms the decisions under review.
......[sgd]..................................................................
Member K. Parker
Catchwords
Vocational Education and Training - cancellation of registered training organisation (RTO) - rejection of application for registration as a provider of courses to overseas students - non-compliance with legislative regime, standards and national code – whether sufficient qualified and skilled trainers and assessors available to deliver courses – whether failure to cooperate with the regulator – “fit and proper person” requirements - whether business properly managed its financial affairs and maintained proper business records - financial viability - some effort made to bring the RTO into compliance - misleading statements provided by high managerial agents and executive officers to the regulator – insufficient insight into past non-compliant conduct - decisions affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Education Services for Overseas Students Act 2000 (Cth)
National Vocational Education and Training Regulation Act 2011 (Cth)Tertiary Education Quality and Standards Agency Act 2011 (Cth)
Cases
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Re Daily Update Pty Ltd and Australian Skills Quality Authority [2014] AATA 118
Stasos v Tax Agents’ Board (1990) 21 ALD 437
Re Western Institute of Technology Pty Ltd and Australian Skills Quality Authority [2017] AATA 187Re Western Institute of Technology Pty Ltd and Australian Skills Quality Authority [2019] AATA 657
Secondary Materials
National Code of Practice for Providers of Education and Training to Overseas Students
Standards for Registered Training Organisations (RTOs) 2015Standards for Registered Training Organisations (RTOs) Amendment 2019 (No. 1)
REASONS FOR DECISION
Member K. Parker
12 July 2019
Claredale Academy Pty Ltd (Claredale) was a registered training organisation (RTO) under the National Vocational Education and Training Regulation Act 2011 (Cth) (NVR Act). Claredale also applied to be registered as a provider of courses to overseas students (CRICOS provider) under the Education Services for Overseas Students Act 2000 (Cth) (ESOS Act).
On 9 June 2017, the Australian Skills Quality Authority (ASQA), as the relevant vocational education and training (VET) regulator, made decisions to cancel Claredale’s RTO registration and to reject its application to be registered as a CRICOS provider (referred to collectively as the decisions under review). Claredale seeks review of these decisions by the General Division of the Administrative Appeals Tribunal (this Tribunal).
Pursuant to its statutory obligations under s 37 and s 38AA of the Administrative Appeals Tribunal Act 1975 (Cth), ASQA lodged a number of sets of documents leading up to the hearing, together comprising 610 pages (T-Documents).
In support of its applications, Claredale sought to rely upon the evidence of its CEO and sole director, Mr Sahil Kansal, including:
(a)an unsworn Affidavit of Mr Kansal dated 6 June 2017 (First Kansal Affidavit);[1] and
(b)an affidavit of Mr Kansal sworn on 14 May 2018 (Second Kansal Affidavit).[2]
[1] Refer Exhibit “A2”.
[2] Refer Exhibit “A1”.
For the reasons set out below, the Tribunal affirms the decisions under review.
issues
Issues relevant to cancellation decision
Section 39 of the NVR Act provides that the National VET Regulator, ASQA, may cancel an RTO’s registration “in any circumstances that the Regulator considers it appropriate to do so”.
Upon closing its case in this application, the ASQA contended that it was appropriate for it to cancel Claredale’s registration because:[3]
(a)Claredale had failed to comply with Standards 1.3, 1.6, 2.3 and 8.1; and
(b)Claredale and Mr Kansal do not met the “fit and proper person” requirements (FPP Requirements).
[3] Refer ASQA’s Outline of Closing Submissions lodged with the Tribunal on 11 July 2018 (ASQA’s Closing Submissions).
The standards referred to by the ASQA are specified in Attachment A of a legislative instrument made under ss 185(1) and 186(1) of the NVR Act entitled Standards for Registered Training Organisations (RTOs) 2015 (Standards).[4] The FPP Requirements referred to in the paragraph above are specified in Schedule 3 to Attachment A of the Standards.
[4] The Standards were amended by the enactment of Standards for Registered Training Organisations (RTOs) Amendment 2019 (No. 1). However, these amendments related to a limited number of standards which are not the focus of this application.
Correspondingly, the issues arising in this application are:
(a)whether Claredale has failed to comply with the standards as identified by ASQA, specifically;
(i)Standards 1.3 and 1.6, which relate to whether Claredale has sufficient trainers and assessors to deliver its training and assessment and whether Claredale’s trainers and assessors have undertaken professional development in the knowledge and practice of vocational training, learning and assessment;
(ii)Standard 2.3, which relates to whether Claredale complied with a requirement to have a written agreement when it acquires third party services; and
(iii)Standard 8.1, which relates to whether Claredale has complied with its obligations to cooperate with ASQA, as its regulator, in accordance with this standard;
(b)whether Claredale have ensured that its executive officers and high managerial agents have met the FPP Requirements; and
(c)upon consideration of those circumstances or any other relevant circumstances, whether it is appropriate to cancel the registration of Claredale as an RTO.
Further, as mentioned above, Claredale applied to be registered as a CRICOS provider and this application was refused by ASQA. Under s 9 of the ESOS Act a “provider” may apply for registration as a CRICOS provider. A “provider” is defined under s 6E of the ESOS Act includes a “registered VET provider” under subsection (1)(b), but it also includes “another person or entity” that provides, or seeks to provide, courses to overseas students – see subsection (1)(e). Accordingly, if the Tribunal finds in this case, that it is appropriate to cancel the registration of Claredale as an RTO, it will not necessarily follow that Claredale is not able to be registered as a CRICOS provider. However, for the reasons set out in this decision, many of the findings made in relation to the review of the cancellation decision are highly relevant to the Tribunal’s consideration of whether Claredale’s application for registration as a CRICOS provider should be refused.
Issues relevant to the decision to refuse registration as a CRICOS provider
The assessment of whether Claredale’s application for registration as a CRICOS provider under the ESOS Act should be granted or refused arise from the registration requirements prescribed in s 11 of the ESOS Act.
Of relevance to this application, issues arise as to whether:
(a)the Tribunal can be satisfied that Claredale has complied with the ESOS Act and the National Code - s 11(b);
(b)Claredale is “fit and proper” to be registered - s 11(c); and
(c)the Tribunal has no reason to be believe that Claredale does not have the clearly demonstrated capacity to provide education of a satisfactory standard or has not been providing, or will not provide, education of a satisfactory standard – s 11(e).
BACKGROUND
Incorporation of Claredale
On 14 March 2014 Claredale was registered with the Australian Securities & Investments Commission (ASIC) as an Australian proprietary company. At the date of registration, Mr Timothy Sillcock was appointed as the sole director and the shares were held jointly by Mr Sillcock and Sillcock Corporate Group Pty Ltd.[5]
[5] Refer Current & Historical Company Extract dated 8 May 2015 at T-Documents pages 19-24.
Application to become an RTO in September 2014 and initial ASQA audit to follow
On 9 September 2014 Claredale lodged an application to become registered as an RTO for the single qualification of “BSB50215 Diploma of Business”.
On 1 December 2014 ASQA conducted a “VET Quality Framework” initial audit of Claredale at its original premises at 23 Milton Parade, Malvern, Victoria.
On 11 February 2015 a panel auditor coordinator at ASQA notified Claredale that as a result of the initial audit, it had identified evidence of compliance with some of the requirements of the VET Quality Framework, but also areas of non-compliance. ASQA provided Claredale with the audit report and invited it to respond with rectification evidence by 11 March 2015.[6] Claredale submitted its rectification evidence to the ASQA on 23 February 2015.[7]
[6] Refer T-Documents pages 5 and 6.
[7] Refer paragraph [8] of the ASQA’s Statement of Facts Issues and Contentions lodged with the Tribunal on 10 May 2018 (ASQA’s SFIC).
Claredale registered as an RTO on 7 April 2015
On 7 April 2015, ASQA approved Claredale’s application for registration as an RTO.[8]
[8] Ibid.
Change of ownership of Claredale following registration
On 24 April 2015 Mr Sillcock ceased to be the sole director of Claredale. On the same day, Mr Sahil Kansal of 7 Bowerbird Place, Truganina, Victoria was appointed as the sole director of Claredale. Mr Kansal and Mr Wajib Ali of 10 Kingsfield Way, Truganina, Victoria became joint equal shareholders in the company.
On 8 May 2015, Mr Sillcock wrote to ASQA to notify it of a change in the directorship and shareholding of Claredale and to advise that he would remain as the CEO and compliance officer.[9] Attached to this email was an ASQA “Notification of material change or event” form completed by Mr Sillcock disclosing that the ownership of Claredale had changed on 24 April 2015 and that the “new executive officer/high managerial agent[s]” was Mr Kansal and Mr Ali.[10]
[9] Refer T-Documents page 7 and 8.
[10] Refer T-Documents pages 9-17.
Application to expand scope of registration in August 2015 and audit to follow
On 4 August 2015 Claredale made an application to expand its scope of registration by seeking to add five more qualifications and one unit of competency.
ASQA conducted a “VET Quality Framework change in scope registration” audit of Claredale on 19 October 2015 and issued an audit report. On 2 November 2015, ASQA sent a letter to Mr Sillcock (in his capacity as the CEO of Claredale) to advise that ASQA had identified evidence of compliance with some requirements of the VET Quality Framework, but also some areas of non-compliance. Claredale was invited to address the identified areas of non-compliance by providing the ASQA with rectification evidence by 30 November 2015.[11]
[11] Refer T-Documents pages 25 and 26.
Expanded scope of registration approved in December 2015
On 5 December 2015 ASQA approved Claredale’s application to expand its scope.
Notification to ASQA of further changes in April 2016
On 28 April 2016 Claredale sent a completed ASQA “Notice of change of provider details” form to ASQA. This form was signed by Mr Sillcock and Mr Kansal.
In section 2, headed, “Changes to registration/contact details and/or location”:
(a)Mr Sillcock was listed as the “Chief Executive” of Claredale; Mr Kansal as the “RTO Manager” and Ms Amita Gupta as the “Training Manager”;
(b)the following six qualifications were listed in the “domestic delivery locations” section as being delivered in all states of Australia:
(i)BSB50215 – Diploma of Business;
(ii)BSB50415 – Diploma of Business Administration;
(iii)BSB50815 – Diploma of International Business;
(iv)CPC20112 – Certificate II in Construction;
(v)CPC40110 – Certificate IV in Building and Construction (Building); and
(vi)(in Queensland and Victoria) CPP20212 – Certificate II in Security Operations;
(c)the following four qualifications were listed in the “offshore delivery locations” section as being delivered in New Delhi, India:
(i)BSB50215 – Diploma of Business;
(ii)BSB50415 – Diploma of Business Administration;
(iii)BSB50815 – Diploma of International Business; and
(iv)CPC40110 – Certificate IV in Building and Construction (Building).
(d)the head office was listed as Level 2, 220 Albert Road, South Melbourne, Victoria; and
(e)the permanent delivery sites were listed as including the premises referred to in the above subparagraph and also, Building E, 183-191 Caroline Springs Blvd., Caroline Springs, Victoria.
Application to be registered as a CRICOS provider on 6 June 2016
On 6 June 2016 Claredale submitted an application to ASQA for Claredale to be registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) under the ESOS Act.[12] ASQA stated that this application sought registration to deliver VET courses to overseas students in the four qualifications listed in paragraph [24(c)].
[12] Refer T-Documents page 37 which is Claredale’s covering letter, although the application itself was not produced.
On 5 July 2016 ASQA notified Claredale that it planned to conduct a “post-initial compliance audit” in the months to follow and requested that Claredale complete a “Delivery Activity Data Summary” (Activity Summary) calling for details about Claredale’s student numbers and completions in the training products within its scope of registration.[13]
[13] Refer T-Documents page 39-41.
On 11 July 2016 Mr Kansal sent a completed Activity Summary for Claredale to ASQA.[14] The Activity Summary states that it was completed by Mr Kansal on 8 July 2016 and that one student was enrolled in the Diploma of Business and one student was enrolled in Certificate IV in Building and Construction (Building). Both courses were being delivered face to face in South Melbourne and the funding source was marked as “Fee for Service – Domestic”.[15] The Activity Summary indicated that those students had not been issued with any qualification as at that date.
[14] Refer T-Documents page 39.
[15] Refer T-Documents page 43.
Post-initial site audit conducted on 3 and 4 August 2016
On 3 and 4 August 2016 ASQA conducted a post-initial site audit of Claredale’s operations, including an assessment of its application for registration as a CRICOS provider against the requirements of the National Code of Practice for Providers of Education and Training to Overseas Students (National Code).
ASQA issued two audit reports. They are undated, but each of them refers to the audit conducted on 3 and 4 August 2016. Mr Sillcock and Mr Kansal were recorded as having been interviewed by ASQA as part of the audit process.
VET audit report
The first report is entitled, “Audit report – VET Quality Framework, Standards for Registered Training Organisations 2015” (VET Audit Report). This report states that Claredale had submitted an application with the Victoria Police to become licenced to deliver security training. This report also states that Claredale was in the process of transferring the position of CEO from Mr Sillcock to Mr Kansal. The ASQA auditors noted that Mr Ali was not in attendance at the audit nor mentioned during it. This report states that Claredale had no enrolled students. Mr Kansal informed the auditors that he intended to create a pathway for its students to universities to continue their studies. Reference is made in this report to Mr Kansal’s history as a trainer since 2008 in other named RTO’s.
The VET Audit Report also states as follows:
(a)Mr Shile Singh had been engaged for marketing the courses domestically and internationally;
(b)in respect to the delivery and assessment of the training products from the business training package Mr Kansal had two trainers “secured” and two trainers “proposed”;
(c)in respect of the delivery and assessment of the security training packages, Mr Kansal had one trainer “secured” and one “proposed”;
(d)its current scope of registration included the courses listed in paragraph [24(b)] and also:
(i)CPP20212 – Certificate II in Security Operations; and
(ii)CPCCOHS1001A – Work safely in the construction industry;
(e)Claredale had no intention of applying for VET FEE HELP and the current fee payment method was full fee for service; and
(f)Claredale’s head office and two classrooms were located at its Albert Road site and it had three classrooms at its site at Caroline Springs.
The overall audit finding by the ASQA was “critical non-compliance”. The lead auditor made the following comment:
The level of non-compliance considers the potential for an adverse impact on the quality of training and assessment outcomes for students. [16]
[16] Refer T-Documents page 47.
The report indicates that the audit was conducted against only some clauses of Standard 1 and Standards 4 and 5. Claredale was recorded to be compliant with Standard 5, and non-compliant with some clauses of Standards 1 and 4.
Claredale found to be compliant with some standards
Standard 5 is directed as ensuring that each learner is properly informed and protected by requiring the RTO to provide certain advice and information to students prior to their enrolment about a range of matters including fee arrangements, the students’ rights as consumers and their rights to refunds in certain circumstances. Claredale was found to be complaint with this standard.
ASQA also found Claredale to be compliant with clause 1.8 of Standard 1, which related to its assessment systems for all of its courses.
Problems identified with Claredale’s training and assessment strategies
Standard 1 requires that the RTO’s training and assessment strategies and practices are responsive to industry and learner needs and that they meet the requirements of training packages and VET accredited courses.
Claredale was found to be non-compliant with clause 1.1 of Standard 1. Although it provided a training and assessment strategy for each training product sample, ASQA found that the strategy was not consistent with the requirements of such training products; Claredale did not provide a framework to guide the learning requirements and the training and assessment arrangements of each training product; it did not identify an amount of training to be provided to be consistent with the requirements of the training products; and the strategies were not consistently implemented. ASQA noted that the strategies did not specify which campus the training and assessment would occur. Specifically, ASQA found that:
(a)the strategy for the Diploma of Business course offered by Claredale did not include a class set of lap top computers to be used by students; and that strategy was not consistently implemented because it stated that the course would be delivered over 52 weeks, whereas the marketing material stated it would be delivered over 33 weeks;
(b)the strategy for the Diploma of International Business course did not include the future job role, nor did it indicate the training resources that were to be used; and
(c)the strategy for the Certificate II in Security Operations course did not include the delivery sequence of the units, a timetable for delivery, the future job role for candidates, whether work placement was required, and whether the units were delivered in clusters or standalone units. Nor did it provide a list of required facilities and equipment.
ASQA found that Claredale was non-compliant with clause 1.3 of Standard 1 because it did not have sufficient trainers and assessors to deliver the training and assessment and was unable to demonstrate consistency between the strategies and marketing materials.
Problems identified with Claredale’s proposed trainers and assessors
ASQA found Claredale to be non-compliant with clause 1.13 of Standard 1 after reviewing the trainer files for five of its nominated trainers. For three of them, ASQA found that Claredale did not demonstrate that they had the vocational qualifications to deliver the training they had been nominated to deliver. ASQA also found that Claredale had not demonstrated that all five trainers and Mr Kansal had current industry skills directly relevant to the training and assessment; or current knowledge and skills in vocational training and learning that informed their training and assessment.
ASQA found Claredale to be non-compliant under clause 1.14(b) of Standard 1 because Claredale was unable to show that its five nominated trainers had been verified against Item 1 or 2 of Schedule 1 to this clause.
ASQA found Claredale to be non-compliant under clause 1.16 of Standard 1 as evidence was not provided of its proposed trainers and assessors having undertaken professional development in the knowledge and practice of vocational training, learning and assessment.
Problems identified with respect to information disseminated by Claredale
ASQA found that Claredale’s marketing and advertising was not factual and did not include accurate information about licensed or regulated outcomes in relation to its security operations courses. ASQA specified that Claredale was required to make clear in its marketing and advertising material that completion of its Certificate II in Security Operations will not enable successful candidates to apply for a security license and work in the security industry; and Claredale had to revise its strategy for this course to reflect the delivery of correct units to allow successful candidates to apply for a license after the vocational outcome. On the basis of this finding, Claredale was found to be non-compliant with clause 4.1 of Standard 4.
CRICOS Audit Report
The second report is entitled, “Audit report – CRICOS, Commonwealth Register of Institutions and Courses for Overseas Students (initial and continuing registration)” (CRICOS Audit Report).[17] This report records that Claredale had requested a maximum capacity of 200 students at its Caroline Springs site.
[17] Refer T-Documents pages 79-100.
The overall “audit finding” recorded in this report, as at 9 September 2016, was that Claredale had met the requirements of Part C of the National Code and was compliant with Part D of the National Code.[18] Claredale was found to have met the requirements of sections 7.1 and 7.3 of Part C, and to be compliant with 8, 9, 10 and 12 of Part D.[19] However, this report recorded that Claredale had not met the requirements of section 12.1 of Part C of the National Code and was non-compliant with Standards 1, 2, 3, 6, 7 and 14 of Part D of the National Code.
[18] Refer T-Documents page 81.
[19] Refer T-Documents page 82.
Insufficient resources and equipment to undertake assessments in first aid course
The reason that ASQA found Claredale had not met the requirements for section 12.1 of Part C was that it was found not to have sufficient resources and equipment for the assessment requirements for the HLTAID003 Provide first aid course, including an infant resuscitation manikin, adrenaline auto-injector training device, AED training device, placebo bronchodilator and spacer device.
Non-compliance with some Standards in Part D of the National Code
ASQA found Claredale to be non-compliant with Standard 1.1 because in its instructions (to prospective students) about how to apply, there were references to “domestic students”. However, ASQA asserts in the report that this is not the audience for this information. Further, ASQA found that Claredale’s course guide and strategy for its Certificate II in Security Operations course included a statement that upon completion of the course, the qualifying students will have career opportunities as security guards/officers; and that this is inaccurate. ASQA asserted that units listed in the strategy will not meet the requirements of the Victoria Police licencing body. For these reasons, ASQA found that Claredale did not demonstrate that its course guide and strategy “was undertaken in a professional manner and maintains the integrity and reputation of the industry and registered providers”.[20]
[20] Refer T-Documents page 84.
ASQA found that Claredale was non-compliant with Standard 1.2 because its marketing material contained misleading information about employment outcomes associated with the Certificate II in Security Operations.
ASQA found that Claredale was compliant with Standard 2.2 in that it had documented procedures in place to assess a prospective student’s qualifications, experience and English language proficiency. However, ASQA found Claredale to be non-compliant with Standard 2.1 because it had provided varying information under two separate headings “Entry Requirements” in the Student Prospectus for its Diploma of Business Administration course and there was also conflicting information provided in the written agreement and Business Services Training Package about whether a fee will be charged to students for materials. This same issue led ASQA to find that Claredale was not compliant with Standard 3.1. ASQA also found that Claredale was non-compliant with Standard 3.2 because it had not provided a “plain English” explanation in its written agreement (with students) as to what would happen in the event that Claredale does not deliver the course.
The ASQA found Claredale compliant with Standards 6.2 to 6.7 inclusive but not compliant with Standard 6.1, as it had not developed an orientation program for students in which to provide information about facilities and resources, and any student visa condition relating to course progress or attendance.
ASQA found Claredale non-compliant with Standard 7.2 because its student handbook did not provide students with access to its student transfer request assessment policy and procedure. All the handbook provided was a summary of the policy and procedure.
ASQA found Claredale non-compliant with Standard 14.1 and 14.2 on the basis of Claredale’s non-compliance with the VET Quality Framework and specifically, by not providing the assessment resources required for the first aid course.
Decision by ASQA in November 2016 to cancel RTO registration and refuse CRICOS application
On 15 November 2016, ASQA approved the auditors’ recommendation to give Claredale notice of ASQA’s intention to cancel its registration (or to impose a sanction of lesser severity) and to invite it to provide a response to the ASQA for its consideration.[21]
[21] Refer T-Documents pages 101-102.
On 16 November 2016, ASQA sent a letter to Claredale to provide notice of the identified non-compliances with the Standards and of ASQA’s intention to make a decision to impose sanctions. Claredale was invited to provide a response by 14 December 2016.[22] At this time, Claredale’s high managerial agents were listed as Sahil Kansal, Wajib Ali and Timothy Sillcock – see page 3 of the Annexure A.
[22] Refer T-Documents pages 107-108.
On the same day, ASQA sent a further letter to Claredale to provide notice of the identified non-compliances with the National Code and to advise that if those non-compliances were not addressed in Claredale’s response to the notice, its application to be registered as a CRICOS provider may be refused, or Claredale may have conditions imposed upon any such registration, or have other sanctions imposed upon Claredale.
Claredale’s response and rectification evidence provided to ASQA in December 2016
Mr Kansal sent Claredale’s response to ASQA on 14 December 2016.[23] On 14 March 2017 Mr Kansal sent an email to ASQA resending the response as the auditor could not access the files sent in the 14 December 2016 email. Mr Kansal sent further emails to ASQA on 14 and 23 March 2017 attaching Claredale’s rectification evidence including a “rectification report mapping document” to identify individual files and sections in response to the identified non-compliances (Rectification Evidence).[24]
[23] Refer T-Documents page 109.
[24] Refer T-Documents page 111.
In response to the VET Audit Report, Claredale informed ASQA that it had sought to address the identified non-compliances as follows:[25]
(a)in respect of Standard 1.1 and 1.2, Claredale had:
(i)modified the structure of its strategies to rectify the deficiencies that had been identified by ASQA;
(ii)taken steps to ensure consistency between its marketing materials and strategies with respect to statements about course duration; and
(iii)implemented a checklist for its marketing materials to be completed before they are used;
(b)in respect of Standards 1.3, 1.13, 1.14 and 1.16, Claredale had adopted new procedures to ensure that the sufficiency of its trainers and assessors had been properly determined and demonstrated; to verify their qualifications; and to ensure that they were undertaking sufficient professional development;
(c)in respect of Standard 4.1, Claredale had revised its marketing material for Certificate II in Security Operations to ensure it was factual, and clearly informed prospective students that the course was not designed for nor was it suitable for individuals seeking to apply for any licence in the security industry.
[25] Refer T-Documents pages 119-120.
In response to the CRICOS Audit Report, Claredale informed ASQA that it had sought to address its findings as follows:[26]
(a)in respect of section 12.1 of Part C, Claredale had ensured that it had all the resources required for the training products, specifically, the resource requirements (including the equipment identified by ASQA) for the first aid course;
(b)in respect of Standard 1.1 and 1.2 of Part D, Claredale had revised its course guide to remove the reference to “domestic students” and its marketing material for its Certificate II in Security Operations course as indicated in paragraph [56(c)];
(c)in respect of Standard 2.1 and 3.1, Claredale had reviewed and amended its student prospectus by rectifying the entry requirements as per the strategy for the relevant course and by stating that “no materials fee” will be charged. Further Claredale informed ASQA it had amended the marketing material for the Certificate II in Construction course so that it stated that Claredale will provide the student with the “PPE”;[27]
(d)in respect of Standard 3.2, Claredale had rectified its student agreement to include a “plain English” explanation about what will happen if it did not deliver a course and had sought to clearly define the reference to “Provider Default”;
(e)in respect of Standard 6.1, Claredale had rectified its student orientation program which explained what facilities and resources will be provided to the students by Claredale and the visa conditions relating to course progress;
(f)in respect of Standard 7.2, Claredale had amended its student handbook to include a complete policy and procedure for transferring students between providers; and
(g)in respect of Standard 14.1 and 14.2, Claredale had provided rectification evidence to ASQA in relation to the identified VET Quality Framework non-compliances and ensured it has the resources required by the training package for the first aid course.
[26] Refer T-Documents pages 113-115.
[27] PPE is an acronym used for “personal protective equipment”.
At the hearing, Mr Kansal confirmed that he stood by Claredale’s response referred to in the paragraphs above and told the Tribunal that he had prepared this response.[28]
[28] Refer Transcript P-35.
ASQA issued an evidence analysis report in March 2017
On 23 March 2017, ASQA conducted a review of Claredale’s Rectification Evidence and issued a report entitled “Evidence analysis – VET Quality Framework” recording its findings as at 28 March 2017 (Evidence Analysis Report).[29] As mentioned above, ASQA’s overall finding was “significant non-compliance” by Claredale and the report indicated “the potential for an adverse impact on the quality of training and assessment outcomes for students”.[30]
[29] Refer T-Documents 121-132.
[30] Refer T-Documents pages 121.
Specifically, ASQA found that Claredale’s non-compliance remained outstanding in relation to Standards 1.1, 1.2, 1.3, 1.13, 1.14, 1.16 of Standard 1 and Standard 4.1. The background provided to the Commissioners of ASQA in the Sanction Decision Record dated 7 April 2017,[31] referred only to non-compliances with Standards 1.1, 1.2 (on the basis that Claredale had omitted to supply a training and assessment strategy as had been requested) and Standards 1.13, 1.14 and 1.16 (on the basis that the proposed trainers did not meet the requirements of those clauses).[32]
[31] Refer T-Documents 133-136.
[32] Refer T-Documents page 135.
On 26 April 2017, ASQA found Claredale remained non-compliant with Standards 1.1, 1.2, 1.3, 1.13, 1.14 and 1.16 of the Standards 2015 and made a decision to cancel Claredale’s RTO registration under the NVR Act (cancellation decision).
Decision to cancel Claredale’s RTO registration and to refuse its CRICOS application – 4 May 2017
On 4 May 2017, ASQA sent an email to Mr Kansal[33] to give notice of the cancellation decision[34] and to refuse Claredale’s application for registration as a CRICOS provider (refusal to register decision).[35] The cancellation decision was stated to take effect from 9 June 2017.
[33] Refer T-Documents page 137.
[34] Refer T-Documents page 139-142.
[35] Refer T-Documents page 143-144.
On 26 May 2017, in respect of both decisions, Claredale lodged applications for review by this Tribunal and requested a stay of the cancellation decision.
On 7 June 2017, the Tribunal (differently constituted) ordered a stay of ASQA’s cancellation decision on condition that it not enrol or commence any students. On 30 August 2017 the Tribunal (differently constituted) imposed a further condition on the stay order requiring Claredale to provide to ASQA certain information and documents. Claredale contended at the hearing that it provided the information and documents to the Tribunal, but did not serve them on the ASQA. The Tribunal (differently constituted) revoked the stay order on 27 November 2017. This resulted in the cessation of Claredale’s registration as an RTO.
First Information Notice issued by ASQA under s 26 on 9 June 2017
By notice issued under s 26 of the NVR Act dated 9 June 2017, ASQA sought certain specified information and documents from Claredale (First Information Notice).[36]
[36] Refer T-Documents pages 167-170.
At the hearing Mr Kansal said that he responded to the notice as he understood the questions in the notice and that he answered them to the best of his ability, after he discussed it with his lawyer. He said he discussed this notice with his lawyer because it was issued after ASQA’s cancellation decision had been made and by that time, he said he had appointed lawyers to represent him in respect of the present applications before this Tribunal.
The First Information Notice requested nine categories (or items) of information and documents. The Tribunal notes that Mr Kansal sent a letter to the ASQA on 27 June 2017 providing a response only in relation to items 2 and 8 of this notice.[37]
[37] Refer T-Documents page 183.
Initially, Claredale declined to provide material (complete copies of student files, including enrolment assessment material and a copy of any qualification of statements of attainment for all students enrolled), in response to Item 1 of the First Information Notice. At the hearing, Mr Kansal told the Tribunal that Claredale did so under the advice of its lawyers.[38] He said he always wished to cooperate with ASQA “to the extent of [his] capability”, but “having my rights [taken] into consideration as well”. When asked which of his rights would have been violated by Claredale having provided the training files to the regulator when requested, Mr Kansal responded, “Because the notice was after the AAT application and the matter was already with the AAT… I did send you some information, not the whole thinking, and with the advice of my lawyer…”[39]
[38] Refer Transcript P-43.
[39] Refer Transcript P 36-37.
At the hearing, Mr Kansal confirmed that Claredale’s response to Item 2 comprised the spreadsheets found at pages 229 and 231 of the T-Documents.
The first spreadsheet on page 229 lists four persons; two of them were referred to as being currently engaged and the other two as having ceased their period of engagement with Claredale on July 2016 and June 2017. Two held administrative roles; one in project management and the other as a senior consultant. Figures were provided in the table to indicate certain amounts paid to them for particular months.
At the hearing, Mr Kansal confirmed that Claredale was not currently trading. When asked what these persons were being paid to do, Mr Kansal said one of them had assisted him while he was making the CRICOS application. He said he was paying those persons because “there are a lot of paperwork in the compliance audits that I had to go through” and he needed assistants to do this. He said it was part of the investment that he made to get Claredale’s CRICOS registration done.[40]
[40] Refer Transcript P-44
The second spreadsheet on page 231 lists Mr Kansal and three other persons. All, except for one, was listed as being currently engaged with Claredale. Mr Kansal was listed as the CEO who was available on a full-time basis, and that he was receiving a Director’s fee. The other three persons were all listed as a “Trainer & Assessor”.
The first trainer/assessor listed, Jeremy Colliers, was marked as “no training provided” and that he was “doing security job currently”. His availability was stated to be “20-40 hours per week” and that he was not providing any hours of training for other RTO’s.
The second trainer/assessor listed, Dario Pappalardo, was recorded as currently engaged with Claredale and that he was being paid on the following basis: “Competencies delivered @ $150 per unit”. He was recorded as being available “20-30 hours per week (depending on requirements)” and was delivering “20-30 hours per week” training at other RTOs.
The third trainer/assessor listed, Dhruv Chauhan, was recorded as having ceased engagement with Claredale in December 2015 as he had “got another job”.
Initially, Claredale did not provide copies of the employment contracts requested by ASQA under Item 3 of the First Information Notice. At the hearing, Mr Kansal accepted that he had initially declined to provide copies of employment contracts. Mr Kansal accepted that it would have been a cooperative approach for him to have provided them.[41]
[41] Refer Transcript P-45.
Mr Kansal confirmed that he had also declined to provide copies of the qualifications for his trainers as requested under the First Information Notice upon the advice of his lawyers. He said he provided them as part of the audit process. He also accepted, under cross-examination, that depriving the regulator of that information made it harder for ASQA to regulate.[42]
[42] Ibid.
Mr Kansal confirmed that initially he did not provided the bank statements or the lease agreement that had been requested under the First Information Notice.
Mr Kansal also acknowledged that he had been asked for copies of the emails to any executive officers or high managerial agents of Claredale or WIT concerning the operations of Claredale, to which request he had said he had nothing to produce.
Mr Kansal accepted that Claredale’s response to the First Information Notice was inadequate but he said, in effect, that he had produced them afterwards. The Tribunal notes the following exchange during cross-examination:
MS BENNETT: You were taken to the tribunal, weren’t you?---Yes.
And you were ordered to provide the additional material?---Yes.
So you had to be compelled to provide them, didn’t you?---Yes.
In a subsequent response to the First Information Notice, Claredale provided copies of its student files, but said it did not have any assessment material to produce because it had been “archived and destroyed”.
At the hearing, Mr Kansal said that Claredale’s process was for assessment material to be kept for six months after the assessment of each unit of competency. He said Claredale kept the record of competency and record of assessment outcome, but did not keep the record of the assessment work done by the student after six months. He said this was his decision and “Yes, under the consultation of different consultants, yes, we have the policy”.[43] Mr Kansal said the six-month time frame was in the record keeping standards of the NVR Act and that “we just adopted the same”. Under cross-examination, Mr Kansal accepted that the time frame he was referring to was a “minimum” time frame.
[43] Refer Transcript P-47.
On 1 September 2017, Claredale provided its response to the ASQA to the First Information Notice.
Second Information Notice issued by ASQA under s 26 on 6 September 2017
ASQA issued a second notice under s 26 on 6 September 2017 addressed to Claredale (Second Information Notice).[44]
[44] Refer T-Documents pages 155-162.
On 13 September 2017[45] and 14 November 2017[46] Claredale provided its response to the ASQA.
[45] Refer T-Documents pages 399-401.
[46] Refer T-Documents pages 402-429.
In the material provided, it was disclosed that one of Claredale’s student enrolments (dated 2 November 2016) was for a student by the name of Amita Gupta for the Diploma of International Business.[47] The Tribunal notes that Ms Gupta was listed (on 28 April 2016) by Mr Kansal as being Claredale’s training manager.
[47] Refer T-Documents, pages 256 and 258.
Mr Kansal’s background
At the hearing, Mr Kansal confirmed that he held a Bachelor of Accounting, a Diploma of Business and an Advanced Diploma of Business.[48] During cross-examination, when Mr Kansal was asked whether he had a reasonable understanding about how companies worked and about the obligations of directors and shareholders, he said he believed so.
[48] Refer Transcript 10 July 2018 P-4.
Mr Wajib Ali’s background
As well as being the joint equal shareholder of Claredale (and before its registration was cancelled, the executive officer and high managerial agent of Claredale - see Annexure A to these Reasons for Decision), Mr Ali is also the sole director, sole shareholder, CEO and high managerial agent of Training Tradesman Pty Ltd (TT).[49] TT is an RTO that was registered on 1 October 2012, and remains currently registered for seven courses including courses in business and construction offered in all States and Territories of Australia.[50]
[49] Refer and T-Documents page 538-540.
[50] Ibid.
Mr Kansal was asked during cross-examination whether Mr Ali had any relationship with Mr Intaj Khan. Mr Kansal told the Tribunal that Mr Ali was the brother of Mr Khan. Mr Kansal accepted that he had not disclosed this relationship between Mr Ali and Mr Khan in response to the First Information Notice, nor anywhere else.[51] Mr Kansal accepted during cross-examination that Mr Ali was a high managerial officer of Claredale.
[51] Refer Transcript P-67.
Mr Kansal’s previous employment with other RTOs
Mr Kansal said he had also worked for other RTOs including:
(a)Western Institute of Technology Pty Ltd (WIT) (from about June 2009 until the end of 2012 or 2013 commencing as an accounts officer and then as a development manager and assistant to the compliance officer);
(b)Ashmark Institute (in about 2013 in a part-time/casual role as a trainer for the Diploma of Business course);
(c)Management Institute of Australia (from about 2013 until early 2014 as its business development manager); and
(d)Ducere (from about March 2014 until April 2016 in the role of product development manager). Ducere offered a Diploma of Business Leadership Management course. Mr Kansal told the Tribunal he trained at Ducere also. Mr Kansal gave evidence that during this period he was not working for any other RTO; nor did he have any other involvement with RTOs.[52]
[52] Refer Transcript P-7, lines 15-17.
Ms Kansal’s involvement with WIT
WIT was formerly an RTO and CRICOS provider. Mr Intaj Khan is WIT’s sole director and sole shareholder, and formerly its CEO. ASQA made decisions to cancel WIT’s registrations on 30 August 2017.[53] WIT sought review by the Administrative Appeals Tribunal (AAT). The AAT affirmed ASQA’s decisions.[54] WIT appealed to the Federal Court of Australia. The matter was remitted to the AAT.
[53] Refer T-Documents page 393. The ASQA has also made a subsequent decision in 2019 not to renew its registrations.
[54] Refer Re Western Institute of Technology Pty Ltd and Australian Skills Quality Authority [2017] AATA 187.
On 3 April 2019 the AAT affirmed ASQA’s decisions.[55] The AAT made the following findings about WIT:[56]
[55] Refer Re Western Institute of Technology Pty Ltd and Australian Skills Quality Authority [2019] AATA 657.
[56] Constituted by Senior Member Cremean and Senior Member Groom.
[113]Having carefully considered all of the materials presented by way of evidence before it, the Tribunal is satisfied that the applicant has failed to comply in material respects with its obligations under the NVR Act and ESOS Act, the RTO Standards and the National Code and, further, that it continues to do so.
[114]The Tribunal has reached this conclusion having regard to the evidence before it of each of the following, which it finds as a fact:
(a) the applicant’s poor training and assessment standards;
(b)the applicant’s history of exceeding approved capacity limits and failure to provide the facilities necessary to deliver quality education outcomes;
(c)the applicant’s failure to engage staff with the requisite qualifications and experience to deliver quality education outcomes;
(d)the applicant’s poor quality English language proficiency assessments;
(e)the inaccuracy of the applicant’s course attendance and progress monitoring; and
(f)the applicant’s failure to comprehensively address identified examples of non-compliance including, in particular, its ongoing failure to address the impact of its non-compliance on current and former students.
Under Item 8 of the First Information Notice, Claredale was requested by ASQA to provide the following information:[57]
8. A detailed description of any association between executive officer or high managerial agents, as those terms are defined by the NVR Act, of Claredale and Western Institute of Technology Pty Ltd or Training Tradesmen Pty Ltd;
[57] Refer T-Documents page 169.
On behalf of Claredale, Mr Kansal provided the following response:
Association with Executives and High Managerial Agents of Western Institute of Technology
Sahil, Kansal, CEO of Claredale Academy Pty Ltd was previously employed by Western Institute of Technology. Sahil knows “Director” of Western Institute of Technology as his ex-employer.
Association with Executives and High Managerial Agents of Training Tradesman
Wajib Ali, CEO of Training Tradesmen holds Shares in Claredale Academy Pty Ltd. His role in Claredale Academy is limited to be an investor and general guidance to the business.
In the Second Kansal Affidavit, Mr Kansal stated the he believed he had “fully disclosed” his association with WIT. Mr Kansal stated (emphasis added):
[93] …That is, I was previously employed by that entity and I know its director Intaj Khan personally.
…
[102] …I believed that I had fully disclosed my association with Mr Ali of Training Tradesmen and Mr Khan of Western Institute of Technology, insofar as it would be relevant to ASQA’s regulation of Claredale or any RTO…
…
[112]To my knowledge, I have no other associations with …Mr Khan. Mr Khan is a friend, ex-employer and landlord, he has no involvement in Claredale…
At paragraph [114] of the Second Kansal Affidavit, Mr Kansal refuted that his response to ASQA’s request to disclose any association between him and Mr Khan was “false and misleading” for the following reason:
The “complex web” of businesses referred to were either mere shelf companies, or were not involved in vocational education and training, or were not controlled by Mr Khan, being entities controlled by his wife. I do not understand the section 26 notices as requiring me to disclose my association with dormant entities outside the vocational education sector or with entities controlled by family members of executive officers or high managerial agents of [WIT] or Training Tradesmen.
Under cross-examination, Mr Kansal gave evidence that he did not have any role with WIT outside of his (previous) role as an employee. Mr Kansal stated, “Between 2011 and April 2016 I was not involved in Western Institute of Technology at all”. He also said he was not involved with any company that provided services to WIT between 2011 and 2016. Mr Kansal was asked whether he or Claredale had been involved in any commercial relationship with WIT since 2016 to which he answered, “Claredale Academy in mid-2015 took the premises owned by Western Institute of Technology”.[58]
[58] Refer Transcript P-9.
However, as cross-examination progressed, Mr Kansal reluctantly accepted that he was “a little bit wrong” about the way he had answered ASQA’s request to provide a detailed description of any association that he had with WIT. When asked how he was wrong, Mr Kansal gave evidence as follows:
MR KANSAL:…In terms of not putting in the names of those companies would never work out. We just, you know, talked those plans, have some – some more business plans, never kicked off, never worked out. Those kinds of information I did not disclose, yes.
…
MS BENNETT: You don’t say here he is your friend, do you?---In this one?
Yes?---No, here I don’t say that.
And to the extent someone reading this – pretend you know nothing and pretend you’re ASQA who is asked for any association. Would someone reading this know he was a close personal friend of yours?---I don’t think so.
No. It doesn’t communicate that, does it?---M’mm.
Would someone reading this know that you had a number of business ventures together?---No.
It doesn’t communication that, does it?---No.
Would someone reading this know that you had joint directorships?---No.
No, it doesn’t communicate that, does it?---No.
In fact it implies a much lesser degree of association, doesn’t it?---It does, yes.
So someone reading this would think that he was someone you previously knew through your work and had no ongoing association?---Yes.
That’s fair, isn’t it?---Yes.
That would be a misleading understanding, isn’t it?---No. If the question is asked not specifically. The way the question was asked and without even the background of the context of the reason of these questions being asked I would not really imagine the (indistinct), the description that I had to give that I wouldn’t drink a coffee with ---
…
MEMBER: Do you accept that on this occasion by not saying- - -?---They may have - - -
- - - that he was a close friend, that you held common directorships, that you had companies were you were common shareholders, that you had involvement with his wife in relation to a number of projects, that it was by what you didn’t say, had the potential to mislead the regulator. Do you accept that?---Yes. Yes.
On 30 August 2017, the Tribunal (differently constituted) ordered Claredale to provide the documents referred to in the First Information Notice. The documents produced included a commercial lease for premises at Level 2, 220 Albert Road, South Melbourne.[59] This lease was executed on 15 May 2016. WIT is the landlord of the premises. Mr Kansal signed this lease on behalf of Claredale and Mr Khan signed it on behalf of WIT. The term of the lease was three years (with an option for a further two years). The commencement date for the lease was “01/05/16 (subjected to ASQA approval for Claredale Academy)”. The first six months of the lease was stated in the lease to be rent-free.
[59] Refer T-Documents pages 584-596.
As matters transpired, WIT provided Claredale with the premises rent-free for two years. The first rental payment took place on 16 June 2017, being the week after Claredale received the First Information Notice from ASQA and a second payment took place on 20 July 2017.[60] After those payments, Mr Kansal stated that he “stopped payments pending the outcome of the VCAT application”.[61]
[60] Refer Transcript P-80.
[61] Refer paragraph [121] of the Second Kansal Affidavit.
In response to Item 7 of the First Information Notice, Mr Kansal stated there was “no email exchange” between Claredale and WIT (or TT). In the Second Kansal Affidavit, Mr Kansal explained that Claredale did not provide any documents in response to this request because:
[101] …there are no emails concerning the operations of Claredale between executive officers or high managerial agents of Claredale and Western Institute of Technology or Training Tradesmen. When I communicate with Mr Ali or Mr Khan it is by telephone or face to face meeting. The offices of Western Institute of Technology are located in the same building as Claredale’s offices.
ASQA contends that Mr Kansal’s assertion that there were no emails between him and Mr Khan is implausible and should not be accepted by the Tribunal.
Claredale produced bank statements in response to Item 6 of the First Information Notice, which showed the transfer of funds between Claredale and WIT.[62] In the Second Kansal Affidavit, Mr Kansal sought to explain these transactions as follows:
[103] The bank statements produced to ASQA record payments made by [WIT] to Claredale. These payments were for one-off purchases by [WIT]’s of excess computer stock Claredale had and for assessment resources I had created for courses common to Claredale and [WIT]. The invoices for these payments were provided to ASQA at appendix 5 to Claredale’s response to item 3 of the 6 September notice.
[104]Claredale and [WIT] do not conduct business with each other save for the fact that Claredale is the tenant of [WIT] under the Lease and the one-off purchases referred to at paragraph 103 above.
[105]I did not disclose my association with the entities referred to at paragraphs 44 to 49 of ASQA’s SOFIC as I do not consider that they fell within the ambit of the request at item 8 of the 7 June notice and those entities have no involvement with the operations of Claredale.
[62] Refer T-Documents page 187 (transactions on 22 February 2017, 6 March 2017, 7 June 2017 and 20 April 2017).
Copies of invoices issued by Claredale to WIT were produced by the ASQA to the Tribunal indicating that Claredale had rendered the following goods and services to WIT:[63]
(a)on 1 June 2015, 10 hours of staff training and professional development ($1,000);
(b)on 5 June 2015, 40 hours of “training consultation” ($3,000) and 16 hours of “assessment tools and resources” ($2,195);
(c)on 15 February 2017, 62 hours of staff training and professional development ($6,200);
(d)on 1 April 2017, 42 hours of staff training and professional development (two-week program) ($4,200); and
(e)on 5 June 2017, 10 desktop PC’s ($7,600).
[63] Refer T-Documents pages 598 to 610.
On 6 November 2017, Mr Kansal made a statutory declaration stating that Claredale had not engaged in any training related activities or delivered an accredited training to any person, other than the students referred to in the information provided to the ASQA on 6 November 2017.[64] He also stated that Claredale did not have any third party agreements with any organisation to provide training services by or for Claredale.
[64] Refer T-Documents page 417.
Mr Kansal’s involvement with Bacchus Designs
Mr Kansal accepted during cross-examination that when he was being asked about his involvement in companies, this would encompass any directorships, shareholdings or secretarial positions. On that basis, Mr Kansal was asked about his involvement with any company, whether or not an RTO, between 2009 and 2014. He said he was only involved in the companies he had already mentioned (noted in the above paragraphs), and then went on to mention that he also registered another company, Bacchus Designs Pty Ltd, of which he was a director and shareholder. He said that this company was a “start-up” printing business, which had never traded.
Mr Kansal’s involvement with Orior College
Subsequently, still during cross-examination, Mr Kansal was asked whether he had been involved with Orior College Pty Ltd (Orior). Mr Kansal said Orior was registered as a company with ASIC and that he was the director and shareholder.[65] He told the Tribunal that he wanted to start up Orior as an RTO. He said no application was made for its registration because he could not get enough resources (i.e. funds, staff, premises and time) to set it up.
[65] In fact, Mr Kansal and Mr Ali are the directors and joint shareholders of Orior. Refer T-Documents pages 490, 493, 454 and 457.
The Tribunal notes in the Second Kansal Affidavit, that Mr Kansal sought to explain why he had not referred to his association with Orior, as follows:
[111] I did not refer to my association with [Orior], of which both myself and Mr Ali are directors and shareholders, as it never traded and I did not think it was relevant. I incorporated [Orior] in 2013 and I intended to seek registration as a registered training organisation in the vocational training and education sector. The [Orior] project never eventuated as I was unable to secure funding. [Orior] never traded or had an Australian Business Number or bank account.
When Mr Kansal was asked whether there were any other companies he was involved in during in this period, he said, “That’s all I can remember out of my head”.[66]
[66] Refer Transcript P-12.
Mr Kansal’s involvement with Melbourne Digital Media
When asked about any involvement with companies after 2014, Mr Kansal said that he was involved with Claredale from 2014; Ducere, who was his employer, from 2014; and Melbourne Digital Media (MDM) (which he said was registered as a magazine and he worked for MDM for a brief period).
Mr Kansal’s involvement with Western Education Limited and its subsidiaries: Westlake Childcare, Early Learning, Western Childcare and Kimberley Education
Under cross-examination, Mr Kansal also told the Tribunal he was involved with Western Education Limited (WE), which he said was “another IPO project that I wanted to work on for childcare, but never got through”.[67] Mr Kansal went on to explain that there was a plan to create a structure for “our” companies and under WE, “we” registered a few more companies including Westlake Childcare (WC) and Early Learning (EL). When asked what Mr Kansal meant by the reference to “we”, he responded as follows:[68]
[67] Refer Transcript P-12
[68] Refer Transcript P-13 and P-14.
MS BENNETT: Who’s we? Because it’s – when it says name Western Education Limited it’s a public listed company. You have to be three directors minimum in the company and the three directors in the initial stage were Mr Intaj Khan and Mr Raja Bili[69] who is my current ---
Mr Kahn is the current director of Western Institute?---Yes.
And the other shareholder, who is the other shareholder you mentioned?---Mr Rajah Bili who is my shareholder in - - -
MEMBER: Mr Ali I think he said.
MS BENNETT: And he’s the current other shareholder in Claredale Academy?---Yes.
So the three of you together engaged in a number of enterprises through Western Education Limited?---Yes, we wanted to.
Can you tell me about each of them?---Yes. So Mr Raja Bili was also my current shareholder of(sic) old friend and Mr Intaj Khan who is also – who was also a friend, and my ex employers and my current landlord for my company. When I was working – after putting in my application for Claredale (indistinct) and didn’t have a full-time job since then, and didn’t have much left basically with just waiting for the decision on (indistinct) to come. So there are different people we meet and (indistinct) business. So Mr Intaj Khan proposed to me that he wanted to go for an IPO project and do – open up some childcares, and he said like because these companies need to have minimum three directors and based on your experience and out relations we want to propose you if you want to be a part of this project, and - - -
MEMBER: So this was the creation of Western Education Limited?---Yes, Western Education Limited.
MS BENNETT: And that’s a public listed company which then was a vehicle it is fair to say to run other enterprises?---Yes, those ones, childcare.
That the three of you were running together?---Yes.
[69] This appears to be a typographical error in the transcript. This name is spelt Mr Wajib Ali.
Mr Kansal also mentioned two further companies, Western Childcare (Western C) and Kimberley Education (KE) which he said were intended to “do the childcare business”. He said KE was not an RTO.
In the Second Kansal Affidavit, Mr Kansal sought to explain why he had not previously disclosed his involvement with these companies. Mr Kansal stated:
[106]I did not refer to my association with [WE], of which both myself and Mr Khan were directors, as it was never involved in the vocational education sector and it was never traded. It was incorporated for the purpose of establishing a project in the childcare sector. The project never eventuated. [WE] is the parent company of other entities including those referred to in ASQA’s SOFIC being [Western C], [WC] and [EL]. I did not disclose my association with these entities for the same reason I did not disclose my association with [WE]. These entities never traded nor did they have Australian Business Numbers or bank accounts.
Mr Kansal’s involvement with Port Melbourne Recruitment and Consultants
During cross-examination Mr Kansal also mentioned the company, Port Melbourne Recruitment and Consultants Pty Ltd (PMRC), which he said was “already there” and was owned by Mr Khan. He said that Mr Khan had “put it” under WE (i.e. WE was the sole shareholder of PMRC). Mr Kansal said he was not a director of this company and that Mr Khan was the sole director; and that he (Mr Kansal) was a director of WE. Mr Kansal said he surrendered his shares in PMRC in about mid-2017, when “the project didn’t go through”.[70]
[70] Refer Transcript P-15
Mr Kansal said the registered office address for “all these companies” was his own home address because “we wanted all the correspondence to come to me at my place and Intaj didn’t want to put his office address for the company”.[71] He also said the principal place of business was listed as his home address and that his job was to receive any letters and get them to Mr Khan and Mr Ali.
[71] Refer Transcript P-15.
When put to him in cross-examination, Mr Kansal accepted that in 2016 he, Mr Khan and Mr Ali had a joint venture and WE was that vehicle; that they were trying to get different enterprises off the ground and they were trying to do that through a particular vehicle.[72]
[72] Refer Transcript P-18.
PMRC is a wholly-owned subsidiary of WE. Mr Kansal, Mr Ali and Mr Khan were directors of WE. PMRC employs the trainers and assessors for WIT and its registered office address is the home address of Mr Kansal. The sole director of PMRC is Mr Khan. Mr Kansal confirmed that from 2016 to 2017, PMRC employed and provided trainers to WIT, which conducted the training. Mr Kansal accepted that those trainers dealt with him during 2016. Mr Kansal said his association with PMRC ceased when the IPO project did not work, which he said was “somewhere in 2017”.
In the Second Kansal Affidavit, Mr Kansal sought to explain why he had not previously disclosed his association with PMRC. Mr Kansal stated:
[107] I did not discuss my association with [PMRC], which is wholly owned by [WE], as I did not consider it was relevant. Mr Khan is the sole director of this company which I understand employs trainers and assessors for [WIT]. This entity has no involvement with Claredale.
Mr Kansal’s involvement with International Training College
The Tribunal notes that following a telephone conversation between a representative of ASQA and Mr Kansal, ASQA sent Mr Kansal an email dated 28 April 2017 requesting that he provide the sale agreement regarding International Training College Pty Ltd (ITC), and that he confirmed that he was the Principal Executive Officer for ITC (based in Miami, Queensland).[73]
[73] Refer T-Documents, P-352.
Mr Kansal’s involvement with Gold Coast International
Mr Kansal was asked during cross-examination about his involvement with Gold Coast International Pty Ltd (GCI). He told the Tribunal he was the CEO of GCI for about six or eight months (from 2016). When asked why he had not mentioned GCI, he said he had not finished talking about the RTOs, suggesting that he had only been questioned about this “up until 2016”. Upon close examination of the transcript of the hearing, the Tribunal notes that this was not correct, as Mr Kansal had given earlier evidence about his involvement in other RTOs as follows:
In 2014 to now have you been involved with any RTOs other than those we have just talked about?---Yes, when I was working for Ducere. Ducere was a partnership organisation, they used to work with TAFEs. So Holmesglen TAFE, the Central Institute of Technology in Perth and TAFE Queensland. They were the partners and I was working for Ducere doing – and getting involved with these TAFEs, Holmesglen and TAFE Queensland, and that ended in April 2016. So during the (indistinct) in Ducere these are the partners TAFEs that I was involved with, and in April 2016 the job ended at Ducere, so do the relationships with these TAFEs as well. So after April 2016 I was not working for anyone.[74]
[74] Refer Transcript P-8
Mr Kansal said at the hearing that he would not have tried to hide his involvement with GCI, because it was a registered RTO with ASQA under the NVR Act, suggesting that his role with GCI is a matter ASQA would have known about.
Mr Kansal said he was the CEO of GCI from November 2016 to September 2017, working with Ms Fiona Parrish, who was the training manager and trainer. He said that he did not work with Mr Khan at this time (for GCI) but that he was referred to GCI by Mr Khan. Mr Kansal said that Mr Khan’s involvement with GCI arose from Mr Khan’s wife being the owner.
Mr Kansal later explained that Mr Khan had been instrumental in the purchase of GCI; that Mr Khan had “made his wife the owner”; had asked Mr Kansal to conduct the due diligence (of ITC); and when the former CEO resigned in November 2016, Mr Khan asked Mr Kansal to help his wife with the company. Mr Kansal said he was not paid to undertake the due diligence.
An ASQA Audit of GCI took place on 9 and 10 August 2016.[75] The participants involved in the audit included Mr Khan, who stated that his position was that of a consultant
[75] Refer T-Documents, P347-351.
The Tribunal notes that Mr Kansal signed an ASQA Statutory Declaration in respect of GCI on 5 September 2016. The Tribunal also notes that Mr Khan witnessed this statutory declaration as a Councillor of the Wyndham City Council.
Mr Kansal told the Tribunal that Mr Khan’s wife appointed Mr Kansal as the CEO of GCI. Mr Kansal said he was happy to be the CEO of GCI while he was waiting for the CRICOS registration of Claredale to take place. Mr Kansal said that from November 2016 to February 2017, “nothing was done in [GCI] because they didn’t get their papers to administration until then”. He said, “In February 2017, [when GCI was bought], and then my job was to do this new transition, finish the thing, and in the meantime I got my own Claredale’s issues, so I left that thing as well”.[76]
[76] Refer Transcript P-21.
During cross-examination, Mr Kansal was taken to the share sale agreement for the sale of ITC to GCI international, which was executed in August 2016. When he was taken to the relevant part of this agreement, Mr Kansal accepted that he was listed in clause 24 as the contact point for the purchaser for notices to be given under the contract. Mr Kansal was asked whether he was involved in the contract to which Ms Shameem Bano (Mr Khan’s wife) and Mr Khan were parties, and he answered in the affirmative. Mr Kansal was asked whether this was because they had ongoing inter-related commercial relationships, which he also answered in the affirmative.
In the Second Kansal Affidavit, Mr Kansal sought to explain why he had not previously disclosed his association with GCI. Mr Kansal stated:
[108] I did not describe my association with RTO [GCI] as I did not consider it to be associated with any executive officers or high managerial agents of Training Tradesmen or [WIT]. It is true that this entity is controlled by Mr Khan’s wife, Bano Shameem, however she is not to my knowledge an executive officer or high managerial agent of Training Tradesmen or [WIT]. I provided consultancy services to RTO [GCI] while Claredale was awaiting the outcome of its CRICOS application.
Mr Kansal’s involvement with Unity School
Mr Kansal was asked in cross-examination why he had not mentioned his involvement with a further RTO, Unity School Pty Ltd (US). His response was “because I was never employed by [US]”. Mr Kansal said that Ms Bano owned US and he came to be involved with US through GCI (as he was working there at the time).[77]
[77] Refer Transcript P-61.
By contrast, in the Second Kansal Affidavit Mr Kansal sought to explain why he had not previously disclosed his association with US as follows:
[109]I did not explain my association with [US], of which Ms Shameem is the sole director and secretary, as I do not believe it to be associated with any executive officers or high managerial agents of Training Tradesmen or [WIT]. I believe [US] offers massage courses. Ms Shameem told me that she wanted to add to [US]’s scope of registration a diploma of accountancy course and asked me whether I would be a trainer as I am a qualified accountant. I agreed.
The Tribunal notes that Ms Bano is the sole shareholder and secretary of US, which is an RTO. US’s application to expand its scope of registration listed Mr Kansal as a nominated trainer/assessor. The CEO of US is listed as Mr Chandrashekaran Ravindranathan. Mr Ravindranathan is also listed as US’s director and secretary.[78]
[78] Refer T-Documents page 526.
Mr Kansal accepted that he was aware that he had been put forward by US, to ASQA, as being one of its trainers for the purpose of its application to extend US’s scope of registration. Mr Kansal told the Tribunal that he had filled out the Trainer/Assessor Skills Matrix that was submitted in support of this application. [79] Mr Kansal was listed for 11 units for the Diploma of Accountancy course.
[79] Refer US Trainer/Assessor Matrix showing Mr Kansal as a trainer/assessor for a Diploma of Accounting course at T-Documents pages 343-346.
The Tribunal notes the following exchange that took place during the cross-examination of Mr Kansal at the hearing:
MS BENNETT: So, you are there setting out the basis upon which you would be an appropriate person for ASQA to rely upon to expand this registration?---Yes.
And that was in July 2017?---Yes.
That was a pretty significant commitment. You’re aware that Unity School now has that registration with scope?---Yes.
And you are providing the training in accordance with the agreement?---No.
Why not?---Because they never asked me for it.
Yes.
MEMBER: And just before go on from that, so with Unity School Pty Ltd who is the CEO?---Chandrashekaran Ravindranathan.
And is he someone that you’ve put up to the ASQA as being one of Claredale Academy’s trainers?---My trainers, yes, yes.
And one of Claredale’s trainers is the CEO of another RTO who puts you up as one of its trainers?---Yes, he was already the CEO.
And now that the registration’s been granted, you’ve never delivered any training sessions for Unity School?---No, I’ve never.
The Tribunal also notes that at the ASQA’s audit of GCI, US’s CEO, Mr Ravindranathan, was presented as a trainer of GCI.
Mr Kansal’s intended business strategy for Claredale’s operations
Mr Kansal gave evidence, when explaining the history of Claredale, that he had done everything step-by-step, specifically, by acquiring Claredale in 2015, applying for an extension of scope of registration, undergoing the audit in October 2015, receiving approval of the extended scope in December 2015, preparing the CRICOS application from January to May 2016, submitting the application and waiting for the outcome. Mr Kansal then said:[80]
MR KANSAL:…I didn’t want to – I didn’t even run, didn’t want to run the RTO itself, what I wanted to run was to run the CRICOS RTO.
MEMBER: Was your business model to attract and train overseas students rather than local students? --- Yes, yes, and at that – for to do that I did that step by step, not really everything all together because of the resources I had to consider as well.
…
MS BENNETT: So it was never your intention to run this RTO as an RTO without CRICOS. Is that right?---This was my business plan to run the RTO for international students.
[80] Refer Transcript P-30 and P-31.
After further questioning during cross-examination, Mr Kansal modified his evidence in regard to this issue by stating as follows:
…Even today I’m not saying that I never had an intention to run the RTO. The only thing I’m saying to you was that I did not want to push myself in the timeframes before I get this thing sorted out. I mean for example I’m telling you that since the (indistinct) before the day I put in an application for CRICOS I was also working full-time. So the only thing which I am saying is my intention was to run the complete RTO providing education and training to both international and domestic students, and I did not want to – want myself to not go away from the actual door of going into the international student market by just focusing on the domestic.
Mr Kansal gave evidence that Claredale had only ever provided training (as an RTO) to about seven students.[81]
[81] Refer Transcript P-34.
Claredale’s training activities
At the hearing, Mr Kansal gave evidence that he had personally delivered some of the training to Claredale’s students. The Tribunal notes the following exchange that took place during the cross-examination of Mr Kansal:
MS BENNETT: What’s the usual process; they enrol and they then carry out face to face training with you in the business diplomas?---Yes, yes.
These are all full fee paying student?---Full fee paying students - - -
Do they pay at the time of enrolment or at the time of attainment?---Yes, its one way or another, it depends what – sometimes we are able to get the fees before they start and sometimes we just taken application fees to start them, and then once they finish their training, or get a certificate of attainment or do something that is when they pay. So it’s really dependable on - - -
How did these students find you, you weren’t advertising at the time?---These are from – I mean I – these are all my – I know them in one way or another, directly or indirectly, so I do know them. So it’s not really a commercially marketing strategy that brought in these students and they got to know about Claredale Academy. It’s like I pursued them from Claredale Academy.
Some of them were trainers at [WIT]?---Yes, two of them.
They needed additional continuing professional development to be able to carry out their training at [WIT]?---Yes.
That was your neighbour?---Yes.
So you did a favour?---Not really a favour. They wanted to do a training, I did the training.
And everyone else here were people that you knew through your various connections in RTOs and - - -?---No, no, not in RTO. They are not involved in any RTOs.
The two who were trainers are trainers in RTOs?---These the only two, that’s right.
Claredale’s purported trainers and assessors
Mr Kansal confirmed at the hearing that two of Claredale’s listed trainers, Mr Dhruv Chauhan and Mr Alfio Dario Pappalardo, were trainers at WIT. When asked about Claredale’s response to the request under the First Information Notice, Mr Kansal said there “wasn’t really a written contract”.[82] He said a letter of offer had been made “subject to the ASQA’s approval”.[83] He said he had not engaged them for any training because Claredale did not have any students. He said, “I didn’t really end up employing them at the end of the day”.[84]
[82] Refer Transcript P49.
[83] Refer Transcript P-50.
[84] Refer Transcript P-49.
Mr Kansal said he did not include these letters of offer in the response to the ASQA because the request made was for “contracts”. He said he did not consider the offer to be a contract, as it was a “conditional offer”.[85] The Tribunal notes the following exchange during cross-examination of Mr Kansal:
MS BENNETT: So you didn’t employ anyone?---Not really. Yes. No.
It’s a yes or no?---No.
…
Do you have an unwritten employment contract with [Mr Jeremy Collier and Mr Alfio Dario Pappalardo]?---Yes, these people can confirm that I did – they are ready to work for Claredale, and they will whenever I can.
How do you know?---Because I know them.
When did you ask them?---Not really from last one year I would say I am in the AAT.
So you have got no idea if they’re available anymore?---No, for these – for few of them I know personally, for example Jeremy and Dhruv I know. I don’t know sure about Dario yet, because I haven’t spoken to him for a while, but, yes, I’m sure they will be able to, you know, schedule their things according to what I would ask.
[85] Refer Transcript P-50.
Under cross-examination, Mr Kansal gave further evidence that the proposed trainers remained available to deliver training for Claredale. He said that he “talks to them” and “knows them personally”, so he “knows what they are doing”.
Specifically, Mr Kansal said that Mr Mickie Oberoi was the proposed trainer for the Certificate II in Security Operations course. Mr Kansal said he had spoken to him “last month, but not about availability of Claredale”.[86] He said he had spoken to Mr Oberoi “last year” about being available for Claredale. He said when he spoke to him last month he was working in the security industry as “a security ground control guy”.[87] He said he was working part-time.
[86] Refer Transcript P-93.
[87] Refer Transcript P-93
Mr Kansal said that he will be available, “all the time”, as the trainer to deliver the business courses. He said there will be one more trainer for the “business training”, being Mr Daljeet Singh. Mr Kansal said he spoke to him “last month” but he did not speak to him about Claredale. He said Mr Daljeet was running a post office with his family but he would be available to provide training for Claredale.[88]
[88] Refer Transcript P-93 and P-94.
Mr Kansal also gave evidence that Mr Chandrashekaran was a proposed trainer for business-related units; but he said he had not asked him about his availability. He said he spoke to about “a month ago” but had not spoken to him about Claredale. He said he was working as the CEO of US. Mr Kansal said he was not sure if he was working on a full-time basis.
Returning to Mr Chauhan, Mr Kansal said he last spoke to him “about six months back” and that he was working somewhere as a casual painter. He said that it is proposed that he would deliver training for Claredale for the Certificate IV in Building Construction course. Mr Kansal said that Mr Pappalardo would also deliver training for this course.[89]
[89] Refer Transcript P-94.
Mr Kansal acknowledged that he had submitted to ASQA evidence of Mr Pappalardo’s qualification, being a Certificate IV in Training and Assessment that he attained on 26 July 2013 from APMI. He also acknowledged that he had been aware that the registration of APMI was cancelled. When asked whether he was concerned that his trainer had received a qualification from a cancelled RTO, Mr Kansal responded as follows: “But the qualification was issued before the RTO was cancelled”.
Mr Kansal maintained that Mr Pappalardo was a qualified person in building and construction and held a Diploma in Building Construction.
Mr Kansal gave evidence that another proposed trainer was Mr Jeremy Collier, who would deliver training for the Certificate II in Security course. He said he had last spoken to him “last year”; and that he was working casually as a security guard for a security company in the city somewhere. He said he works for a few days each week and that he has a qualified security guard licence and he is also licenced to train in security qualifications.[90]
[90] Refer Transcript P-100.
Management of Claredale’s financial affairs
Secondly, ASQA contended that Mr Kansal demonstrated a lack of understanding of the importance of, and capacity to comply with, the regulatory environment; as illustrated by the following:
(a)his approach in responding to the information notices and the AAT review process, including:
(i)Mr Kansal’s evidence seeking to maintain there were no written communications of any kind between him and Mr Khan. ASQA contended this is unsustainable (and should be found by this Tribunal to be untruthful) in light of Mr Kansal’s and Mr Khan’s close personal and commercial association; and
(ii)Mr Kansal’s “tendency to substitute his opinion for legal obligation”;
(b)Mr Kansal’s use of Claredale as a “front” for his personal business affairs by using the Claredale NAB bank account for transactions unrelated to Claredale’s business operations. ASQA contended that Mr Kansal was running his personal business affairs through Claredale and that it was not the case that Claredale was running separate businesses other than the business of operating an RTO. ASQA contended that Mr Kansal had not distinguished between his own interests and those of Claredale, to which he owed fiduciary obligations;
(c)Mr Kansal did not maintain proper records, minutes of meetings or other compliance systems for the operation of Claredale. ASQA contended that Mr Kansal’s explanation that “he did not think it was important” was an example of “the substitution of his opinion for legal obligation”. ASQA contended that the Tribunal could not be satisfied that Mr Kansal was properly equipped to run an RTO;
(d)Claredale’s failure to properly engage trainers and ignore proper processes for doing so, by instead engaging them on a “cash in hand” basis (because of Mr Kansal’s opinion that compliance was not warranted in the circumstances). ASQA contended that the Tribunal could not be satisfied that training would be done properly; and
(e)Mr Kansal’s inclination to take “short-cuts” to obtain his desired goal such as purchasing Claredale, as a “shell” without a trading history for $80,000, because it had been granted registration under the NVR Act as an RTO. ASQA contended that Mr Kansal did this in order to overcome the regulatory hurdles imposed by legislation.
Thirdly, ASQA contended that Mr Kansal’s conduct in the way he conducted Claredale’s business was particularly concerning given that Claredale proposed to use Mr Kansal as a trainer to deliver training to students about how to run a business; and those students may in turn go out into the community and run businesses in accordance with this training (following Mr Kansal’s example). ASQA contended that it was not enough to impose a condition that Claredale not deliver building and construction courses within its scope of registration (as proposed by Claredale at the end of the hearing), in order to contain a potential threat of harm to the public that might arise from the continued operation of Claredale.
Fourthly, ASQA contended that Mr Kansal demonstrated a lack of insight into the issues that had been ventilated in the hearing before this Tribunal[144] and Claredale’s closing submissions at the conclusion of the hearing demonstrated an “entire lack of insight into the significance of serious misconduct that [Mr Kansal] had engaged in”. ASQA highlighted to the Tribunal that when Mr Kansal gave evidence at the hearing, he conceded that his conduct was unacceptable. However, when Claredale made its closing submissions, its position was put on the basis that what had happened “may not reflect best practice” and that “things could have been done differently”. ASQA contended that that this characterisation demonstrated that the lesson had not been learnt. ASQA also contended that by Claredale seeking to explain Mr Kansal’s lack of disclosure in relation to his or Mr Ali’s association with WIT, TT or Mr Khan, on account of Mr Kansal not knowing what matters were being investigated by ASQA, was a significant indicator of a lack of insight.
[144] Refer the ASQA’s Closing Submissions at paragraphs [1], [2] and [8].
Finally, ASQA contended that Claredale’s closing submission that Mr Kansal had “taken his foot off the pedal” because “Claredale was not really running as an RTO”, reflected a dramatic understatement of the significance of Mr Kansal’s non-compliance which demonstrated a lack of insight and that even with the scrutiny afforded by the AAT review process, Mr Kansal had not given his non-compliances the significance it deserved. ASQA contended that “the idea he should have opportunity to run the RTO in a compliant way, following having been given and squandered that opportunity over the last two years, is a submission of breathtaking audacity”.
Claredale’s contentions
In the Second Kansal Affidavit, Mr Kansal addressed the suggestion that the FPP Requirements were not met in reference to both him and Mr Ali, as the high managerial agents of Claredale. Mr Kansal stated that neither of them have been charged or convicted with an offence, nor have they been an executive officer or high managerial agent of an RTO (or been involved in the business of delivering course or other services on behalf of an executive officer or high managerial agent), at a time when the RTO had its registration cancelled or suspended for having breached a condition of registration under the ESOS Act or Tertiary Education Quality and Standards Agency Act 2011 (Cth) (TEQSA Act). He stated that neither of them have ever been bankrupt or disqualified from managing a corporation under the Corporations Act 2001 (Cth).[145]
[145] Refer the Second Kansal Affidavit at paragraphs [123] to [128].
Mr Kansal stated that neither he nor Mr Ali had ever provided a VET regulator with false or misleading information, or made a false or misleading statement to it. He said he could think of no reason why the public would not have confidence in “our suitability” to be involved in an organisation that provides, assesses or issues nationally recognised qualifications. Mr Kansal stated as follows:[146]
On the contrary, we are diligent, honest, hard-working and motivated and wish to ensure that Claredale is able to provide quality vocational education outcomes for students, in compliance with all regulatory requirements.
[146] Refer the Second Kansal Affidavit at paragraph [134].
During closing submissions at the hearing, Claredale’s counsel contended that it was open to the Tribunal to make a decision which might include “a substituted decision for example which provides for registration on conditions which could be imposed under s 29 of NVR Act and s 10B of ESOS Act”; or the Tribunal may wish to impose other sanctions, as an alternative to de-registration, such as reducing Claredale’s registration period under s 36(2A) of the NVR Act to three years, or amending its scope of registration under s 36(2D) to remove the building and construction-related courses.
In answer to the Tribunal’s specific enquiry, Claredale indicated that it would be amenable to the following conditions being imposed on its registrations, if considered appropriate by the Tribunal:
(a)that before any training commenced, Claredale would engage in a process with ASQA to establish who Claredale’s “proposed trainers were, what courses they would train, and demonstrate satisfaction against the relevant standards as to their qualifications”;
(b)that Mr Kansal not deliver any training to Claredale’s students personally;[147]
(c)quarterly reporting by Claredale of its accounts; and
(d)retention of all records, including assessment records, in respect of all of Claredale’s students for a period of three years from the date a person ceases to be a student.
[147] At the hearing, the Tribunal asked Claredale whether it would be amenable to such condition if the Tribunal ultimately decided to set aside the decision under review. In other words, the suggestion of the imposition of such condition did not arise from Claredale or Mr Kansal.
Claredale explained that the reason it had nominated a three-year period in relation to the proposed alternative sanction of reducing its registration was that this period would allow enough time to enable Claredale “to get up and running and to enrol some students, start delivering some training (with the duration of its course being one-year) and to allow some students to go through the college”, and to demonstrate a consistent pattern of compliance.
Claredale addressed the first issue that had been raised by ASQA about compliance with the information notices.
In relation to the First Information Notice, Claredale contended that Mr Kansal sought legal advice from its lawyers about it and said that “there is nothing unusual about that. Where an entity in dispute with a regulator, one might think it generally prudent to seek legal advice in those circumstances”.
Claredale contended that the legal advice provided to Claredale by its lawyers was that s 26 of the NVR Act only required production of information, and not of documents.[148] Based on that advice, Mr Kansal only initially provided Claredale’s response to Items 2 and 8. Claredale contended that there was a basis upon which the legal advice had been given and that “some consideration” was made as to whether or not to respond to the Frist Information Notice. Claredale contended that it was unfair to characterise Mr Kansal’s response to the First Information Notice as his having disregarded it or that he did not consider it necessary to respond to it.
[148] Refer Transcript 10 July 2018 P-43.
Claredale contended that the dispute between it and ASQA about the construction of s 26 of the NVR Act (i.e. whether it extended to documents), was agitated at an interlocutory hearing before the Tribunal (differently constituted); and an order was made for Claredale to provide the requested documents. Claredale referred the Tribunal to Mr Kansal’s evidence that after such orders were made; Claredale complied with the First Information Notice on 6 September 2017 “to the best of its ability and based on its understanding of the notice at that time”.[149]
[149] Refer T-Documents page 181 onwards
Claredale contended that:
(a)the Tribunal should place its response to the First Information Notice against the background of this notice have being issued and the matters set out in the notice itself, including that there had been a cancellation decision and refusal to register Claredale as a CRICOS provider on the basis of alleged non-compliances with various standards;
(b)the First Information Notice stated that ASQA was conducting further inquiries in relation to information previously provided concerning financial information and access to legitimacy and qualification of trainers, as well as training provided by Claredale and the link between it and WIT and TT;[150]
(c)in this context, it is understandable that Claredale’s response in relation to its associations was on the basis that the request was made “within the scope of RTO activities” and not, “in connection with activities falling outside of that scope”;
(d)its response should be assessed as at the point in time that Mr Kansal received it and was responding to it, and not by looking at it now, “with everything that has passed”; and
(e)“the notice does not make plain on its face, the connection between the regulatory function it is conducting that it requires the information for” and that this made it difficult for Claredale to know what was required in order for it to comply with the notice.
[150] Refer T-Documents page 167.
In relation to the Second Information Notice, Claredale contended that no objection was taken to it and Claredale complied with it on 13 and 27 September 2017 (and 14 November 2017).
Claredale acknowledged during closing submissions that Mr Kansal had accepted that “things could have been done differently, now that he has a greater understanding”. Claredale contended that this “needs to be taken in the context of standing here now, as opposed to assessments made at the time”.
Claredale contended that Mr Kansal had agreed at the hearing that other businesses were being run through the NAB bank account named “Claredale Academy”. However, it was contended that Claredale was not under an obligation to maintain separate accounts and that it was “not the subject of any ring-fencing”. Claredale further contended that this conduct needed to be considered in the context of Claredale being an RTO which was not operating as an RTO or providing any training.
Claredale asked the Tribunal to take into account Mr Kansal’s evidence that Claredale was “not really training as an RTO” and that the RTO registration was a small part of Claredale’s business plan. Claredale also contended that the Tribunal should take into account that the stay granted to Claredale was the subject of a condition not to enrol any new students and that this provided “an explanation, not necessarily an excuse”, for some of the matters Mr Kansal had agreed during cross-examination at the hearing that “may not reflect best practice”.
Claredale contended that Mr Kansal should not be punished “to the extent that Mr Kansal may be a friend or acquaintance of Mr Khan who may have a particular type of character”.
Claredale did not agree with ASQA’s characterisation of Claredale’s “history of non-compliance” and ASQA’s suggestion that “the destruction of docs is the only thing working effectively”. Claredale contended that the audit reports revealed that there had been many areas where it had demonstrated compliance.
Claredale contended that the alternative sanctions put forward by it to the Tribunal “should be adequate to satisfy the ASQA” and that the decisions under review should be set aside to give Claredale and Mr Kansal a chance “to get up and running”. Claredale contended when closing its case as follows:
The fact that in the last period, he has taken his foot off the pedal which has led to a number of practices which are less than ideal, has to be seen in context of an RTO that really isn’t at the present time engaged in the business of an RTO. To the extent that there are remaining concerns, the conditions that have been put forward should go to addressing those.
The Tribunal has closely considered the evidence and contentions of both parties in relation to the issue of whether Claredale has ensured that Mr Kansal and Mr Ali met the FPP Requirements.
Dealing first with Mr Kansal, based on the evidence set out in the Second Kansal Affidavit, the Tribunal accepts that most of the criteria set out in paragraph [267] do not apply to him. However, the Tribunal considers that Mr Kansal has made a number of misleading representations to ASQA including:
(a)the extent of his and Mr Ali’s past association and involvement with WIT, TT and Mr Khan; and
(b)the extent to which Claredale had engaged or otherwise secured trainers and assessors to deliver its courses.
These misrepresentations were made by the content of Mr Kansal’s written disclosures and by what he chose not to disclose to ASQA when responding to requests for information made to him.
Leading up to the hearing, Mr Kansal did not concede any wrongdoing in his past approach. At the hearing, Mr Kansal ultimately conceded that by not disclosing to ASQA that he was a close friend of Mr Khan, that he held common directorships with him, and was involved in projects with Mr Khan’s wife, that he had potentially misled the regulator – see paragraph [98].
The Tribunal is satisfied that Mr Kansal was careful not to conceal any more to ASQA than he thought he needed to. To serve this purpose, Mr Kansal was quick to adopt an overly literal interpretation of the requests for information made to him by ASQA. For instance, Mr Kansal was careful not to conceal his further association with Mr Khan through GCI by asserting that the request did not specifically ask him to state an association with Mr Khan’s wife. Mr Kansal knew very well that his interaction with GCI did not take place without the significant involvement of Mr Khan, who had orchestrated Mr Kansal taking on the role of CEO for a period under a temporary consultancy arrangement. Mr Khan’s evidence revealed that his role at GCI was more significant than the impression given by Mr Kansal when he gave evidence about Mr Khan’s involvement in GCI. Another example is that the close familial relationship between Mr Ali and Mr Khan was only revealed by Mr Kansal during cross-examination. There is no evidence to suggest that separately, Mr Ali, as the listed high managerial agent of Claredale, disclosed to ASQA that Mr Khan was his brother.
The Tribunal is satisfied that given the closeness of the personal and business relationships between each of Mr Kansal, Mr Ali, Mr Khan and Mr Khan’s wife, that Mr Kansal and Mr Ali were aware that in 2017 ASQA had cancelled the registration of WIT and the review processes that followed the cancellation. Both Mr Ali and Mr Kansal have been closely involved in the RTO sector for a considerable period of time. Mr Kansal gave evidence that he was aware of the obligations arising under laws regulating RTOs. The Tribunal is satisfied that it is reasonable to assume that both Mr Ali and Mr Kansal were conscious that it was not in Claredale’s interests, particularly given the specific criteria set out in subparagraphs [b], [c] and [f] of the FPP Requirements, for their close associations with WIT or Mr Khan to be revealed to the ASQA once WIT’s registration was cancelled.
The Tribunal is satisfied that Mr Ali and Mr Kansal have deliberately concealed such involvement by:
(a)the decision to not disclose information about bank accounts (item 5), the lease (item 6) or emails between Claredale and WIT (item 7) also meant that the ongoing relationship/close association was not fully disclosed as it showed the lease (and dispute) between the parties, the money going between WIT and Claredale, and the emails between Mr Kansal and Mr Khan;
(b)Mr Ali remaining silent in relation to the requests of ASQA (and in relation to the review process before this Tribunal), particularly since he is an executive officer and was a high managerial agent of Claredale at the relevant time; and
(c)Mr Kansal responding to Item 8 of the First Information Notice by only disclosing one of the many different aspects of association between Mr Kansal and Mr Ali with WIT and Mr Khan, instead of disclosing them in a comprehensive and transparent manner.
The Tribunal has reached this conclusion following an assessment made on the basis of the circumstances as they existed at the time Claredale responded to the First Information Notice. The Tribunal accepts that it was reasonable for Mr Kansal to have decided to seek legal advice about how Claredale should respond to the First Information Notice; given that this notice was issued at the time its registration was cancelled by the ASQA. The Tribunal considers that it was reasonable for Mr Kansal to rely on his legal advice at the time, regardless of whether there was a reasonable basis for the interpretation that was given by Claredale’s lawyers of the reach of ASQA’s powers under s 26 of the NVR Act. As a result, the Tribunal does not consider the delay in Claredale responding to the First Information Notice provided a clear demonstration of a lack of cooperation and candour by Mr Kansal or Mr Ali.
However, when the response was ultimately provided by Mr Kansal on behalf of Claredale, the Tribunal finds that it contained misleading information, as identified in paragraph [299], and also that it was reasonable to assume that Mr Kansal, who prepared and provided that response, knew that this information was misleading.
Specifically, in relation to paragraph [299(a)] above, the Tribunal notes that ASQA requested Claredale to provide a detailed description of any association between him or Mr Ali and WIT or TT. On any reading of Item 8, this is a very broad request. The wording was plain on its face and unambiguous. It was not qualified and clearly required Claredale to provide a “detailed” description about “any” association. Item 8 did not call for the recipient of the notice to embark upon an interpretative exercise to seek to find meaning in what ASQA was requesting. In such circumstances, the Tribunal does not accept the explanation proffered by Claredale as to why Mr Kansal had, in effect, read down the scope of this request based on his understanding (at the time) of what ASQA was investigating. That contention is misconceived and only serves to illustrate Mr Kansal’s apparent eagerness to find a reason to avoid responding to this request in a forthright and transparent manner.
The Tribunal accepts ASQA’s contentions that, by Mr Kansal seeking to explain why he responded in the way he did to Item 8, he demonstrated a lack of understanding about the regulatory environment in which Claredale was operating. It was not for Mr Kansal, or any other regulated person or entity, to read down the scope of a regulator’s request for information and documents, based on their own opinions about what the regulator might need to receive to serve its functions as a regulator. If Mr Kansal took objection to (or was unsure about) the scope of the notice, it was incumbent upon him to have indicated this and to have qualified his response to indicate that he had not disclosed other aspects of the association between him or Mr Ali and WIT or TT based on that objection. He did not do so. Instead, Mr Kansal left the reader of his response, in this case being ASQA, and subsequently this Tribunal, to believe that his association constituted only of the previous employment relationship which existed between him and WIT.
Specifically, in relation to paragraph [299(b)], the Tribunal notes that the VET Audit Report included references, as detailed in paragraph [31(b)] and [31(c)], indicating that Mr Kansal had two trainers “secured” and two trainers “proposed” in relation to the business training package and one trainer “secured” and one “proposed” in relation to the security training packages. Mr Kansal’s evidence at the hearing revealed that there were in fact, no trainers, apart from Mr Kansal himself, who could be characterised as having been “secured” by Claredale.
The Tribunal also notes that the AQSA requested the following information from Claredale under Item 2 of the First Information Notice (emphasis added):[151]
[151] Refer T-Documents page 168.
On a single spreadsheet with one row per employee, director or contractor, from 1 January 2015 to the date of this notice, the following details of all employees, directors of, or contractors engaged by, the RTO:
a. Surname…, first name;
…
e. Period of engagement and reason for cessation, if applicable:
g. Where the director, employee and contractor is a trainer or assessor:
…
iv.the number of hours a week the trainer is available to train for Claredale;
v. other RTOs that trainer is currently engaged with;…
In response, Mr Kansal sent a letter to ASQA dated 27 June 2017 (copied in to his lawyers) in which he made the following statement on behalf of Claredale (emphasis added):[152]
Item 2 Response:
Please find attached as the Excel Sheet detailing the worker/contractors engaged with Claredale Academy Pty Ltd.
[152] Refer T-Documents page 183.
As mentioned above, Claredale had been requested under the First Information Notice to produce the employment contact for every trainer and assessor engaged by it in the period 1 January 2015 to the date of that notice (Item 3). When Claredale (via Mr Kansal) provided the spreadsheet detailing the workers/contractors engaged with Claredale, it did so at a time when it was refusing to provide the documents requested under Item 3 on the strength of its lawyer’s advice that Claredale was not required to do so, as s 26 was considered not to extend ASQA’s powers to request such documents. At this point, Claredale did not disclose, when it could have easily done so, that there were no employment contracts in existence.
As mentioned above, this issue was ventilated before the Tribunal (differently constituted) and Claredale was ordered to produce such documents. At that time, i.e. on 6 September 2017, Mr Kansal provided the following response to the request for documents under Item 3 as follows:[153]
Since, Claredale Academy has not operated much since its registration; there is no formal contract in place with trainers. The training delivered in the past was mostly by the Sahil Kansal (Director) and the other trainers were paid for the time they were engaged in training and assessment. The trainers are engaged through expression of interest subjected to Claredale starts operating.
[153] Refer T-Documents page 183.
Mr Kansal attached to this letter a spreadsheet containing details in respect of Mr Kansal, Mr Collier, Mr Pappalardo and Mr Chauhan. Mr Kansal was described as holding the position of CEO and the others as holding the position of “Trainer & Assessor”. The “period of engagement” was stated by Mr Kansal in this spreadsheet to be:[154]
(a)for Mr Collier, “May 2016 – Current”;
(b)for Mr Pappalardo, “Dec 2015 – Current”; and
(c)for Mr Chauhan, “Nov 2015 – Dec 2015”.
[154] Refer T-Documents page 231.
In the Second Information Notice, ASQA (at Item 7) requested that Claredale provide “copies of any contracts with third parties providing services to or contracted to have services provided by Claredale”.[155] ASQA (at Item 10) also requested that Claredale provide “evidence of wage payments to: a. Helen Johnson; b. Dhruv Chauhan; and c. Dario Pappalardo”.[156]
[155] Refer T-Documents page 158.
[156] Refer T-Documents page 161.
Mr Kansal (on behalf of Claredale) sent, via Claredale’s lawyers, a submission to ASQA on about 14 November 2017.[157] In response to Item 7, Mr Kansal responded as follows:[158]
Claredale Academy had never engaged in any Third Party arrangements for providing training. Claredale had neither contracted a third party nor contracted by a third party to provide any training services…
[157] Refer T-Documents page 402.
[158] Refer T-Documents page 404.
In response to Item 10, Mr Kansal responded as follows:[159]
The above mentioned contractors worked very briefly for Claredale Academy and the wages were paid in cash.
[159] Refer T-Documents page 406.
As set out in paragraphs [139] and [140], during cross-examination Mr Kansal conceded that Claredale did not actually employ anyone. At its highest, Mr Kansal said there were unwritten employment contacts with Mr Collier and Mr Pappalardo; and he asserted they were ready to work for Claredale. When Mr Kansal was asked when he last spoke to them about their respective availability, he revealed that some considerable time had passed since he had done so.
Based on this evidence, the Tribunal finds that Mr Kansal had in place, at best, tenuous and extremely informal arrangements to make contact with certain persons should Claredale commence courses in the future, to ascertain whether any of those persons were available to be engaged by Claredale to deliver services in the roles of trainer and assessor. This position is a very long way from Claredale having engaged people as trainers and assessors, when Mr Kansal made the statement that he did on 27 June 2017 to ASQA, indicating that Claredale had done so. Upon Mr Kansal being put to the test about this statement, first by further requests made in the Second Information Notice, and subsequently when Mr Kansal was questioned about it at the hearing before this Tribunal, Mr Kansal progressively qualified his earlier statement, to the point where he conceded that Claredale had not employed anyone but he “knew” they would be available to work for Claredale as trainers and assessors because he knew them personally and he knew what they are doing (see paragraph [141]).
On this basis, the Tribunal finds that the information provided by Mr Kansal to ASQA leading up to the concessions he made the hearing, was misleading and that it is reasonable to assume (particularly given Mr Kansal’s accounting and business-related qualifications purportedly equipping him with the knowledge to be able to distinguish between whether a person had been engaged or employed by an entity), that he was aware that this information was misleading. Mr Kansal had every opportunity, when he responded to the First Information Notice on 27 June 2017, to state that Claredale did not at that time engage or employ any trainers or assessors but that Mr Kansal knew of some persons that Claredale may be able to engage in the future in the event that it started to deliver courses. Such a statement would have reflected the facts as they existed as at 27 June 2017.
The Tribunal is concerned about Mr Kansal’s approach to compliance with Standard 2.3 as outlined above in paragraphs [253] to [258]. His approach indicates that Mr Kansal’s understanding of his legal obligations is based on his perception about what the law should require rather than what it does require. Mr Kansal adopted a similar approach in relation to various financial transactions that he allowed to take place through Claredale’s bank accounts, using Claredale’s funds in circumstances where they were wholly unrelated to business being conducted by Claredale. Instead, by his own admission, the circumstances were related to the personal affairs of Mr Kansal. Those matters are outlined in detail above under the heading “Management of Claredale’s financial affairs”. Mr Kansal has also adopted a similar approach when choosing to document (or not) various financial and company affairs he had conducted on behalf of Claredale. The Tribunal considers there is a risk that Mr Kansal will continue to adopt such practices in the future. This consideration counts against setting aside the decisions under review.
The Tribunal does not make any findings adverse to Claredale in relation ASQA’s contention that Mr Kansal had been untruthful by continuing to maintain that there were no written communications (in particular, emails) that had passed between him and Mr Khan. The Tribunal acknowledges that two emails from Mr Kansal to Mr Khan were subsequently produced to the Tribunal, at pages 582 and 583 of the T-Documents, establishing that Mr Kansal’s evidence was not truthful. The Tribunal considers that it is likely that there other emails and written communications have passed directly between Mr Kansal and Mr Khan, which have not been acknowledged or produced by Mr Khan; for instance in relation to the VCAT dispute that evolved about the lease agreement between them. However, the Tribunal is willing to accept for present purposes, based on the evidence given by Mr Kansal and Mr Khan about their usual channels of communication that they mainly communicate with each other by telephone or in face-to-face meetings. Such an approach to business communication is consistent with Mr Kansal’s seemingly “informal” approach to business or commercial dealings with others, in that he does not always document what has taken place concerning his business affairs, including at times when it would be legally or commercially necessary, or at least prudent for him to do so.
The Tribunal considers that Mr Ali, as an executive officer or high managerial agent of Claredale, also played a role in the provision of misleading information to ASQA. He did so by having acquiesced to the requests made for information under the First and Second Information Notices; and also because of his silence throughout the course of this application before the Tribunal and his absence from the hearing. He took no steps, when it was appropriate that he do so, to disclose to ASQA his very significant association with WIT and Mr Khan, in circumstances where it was apparent from the information notices that the ASQA was seeking such information.
The Tribunal is satisfied that, based on the matters outlined above, the public is unlikely to have confidence in either Mr Kansal’s or Mr Ali’s suitability to be involved in an organisation that provides, assesses or issues nationally-recognised qualifications. Mr Kansal and Mr Ali, as the executive officers and his managerial agents of Claredale have displayed that they are unable to manage the operations of Claredale in the regulated environment that exists in this sector. The misleading statements by Mr Kansal and the inaction and notable absence of Mr Ali at a time when the future of Claredale as an RTO was under threat, casts doubt upon whether either of them have the requisite integrity and trustworthiness to continue to be entrusted with the significant responsibility of operating a compliant RTO in light of the Tribunal’s other findings in this matter.
The Tribunal accepts that at the hearing Mr Kansal went some way in acknowledging the misleading conduct that had taken place. However, somewhat disappointingly, such insight seemed to have fallen away again by the end of the hearing, as the misleading conduct was re-characterised in Claredale’s closing submissions as “may not have been best practice”. Despite Claredale’s counsel’s indication that these submissions were “hers”, she confirmed that she had made her submissions on instructions. This has left the Tribunal with a sense that Mr Kansal’s earlier indications of him having some insight may have been fleeting; and that it is more probable than not that he will engage in such conduct in the future in his business dealings generally, and when operating an RTO; particularly as his memory of the concessions he initially made at the hearing fade further into the past.
Further, the Tribunal considers that Mr Kansal was unable to grasp to any extent why there might have been a problem with him having used significant sums of Claredale’s funds for his own personal projects. The Tribunal considers that this only served to show that the funds that were initially deposited into Claredale’s bank accounts may have been “window dressing”, to make it appear to ASQA that Claredale was financially viable. When, in essence, provision had clearly been made for those funds, or a large part of them, to be expended on other projects completely unrelated to the RTO operations of Claredale. Furthermore, Mr Kansal displayed a lack of insight into his obligations as a company director by the manner in which he chose to use and account for Claredale’s funds.
In conclusion, the Tribunal is not satisfied that Claredale has ensured that its executive offers and high managerial agents, Mr Kansal and Mr Ali, have met each of the criteria in the FPP Requirements. In particular, the Tribunal concludes that Mr Kansal and Mr Ali have failed to meet the criteria under subparagraph (g) and (i).
In light of this conclusion, and the findings of the Tribunal that Claredale had failed to comply with Standards 1.2, 1.3, 2.3 and 8.1 and does not meet the conditions for registration under ss 22, 23 and 27 of the NVR Act, the Tribunal considers that it is appropriate that Claredale’s registration as an RTO is cancelled. The Tribunal does not consider that the alternative sanctions suggested by Claredale will adequately address the many shortcomings of Claredale and the persons managing this RTO. Certainly not to a level that gives the Tribunal confidence that the Standards and statutory requirements under the NVR Act, and other statutory instruments, would be complied with by Claredale now or in the near future. For this reason, the Tribunal affirms the cancellation decision.
CONSIDERATION – REFUSAL OF REGISTRATION DECISION
Based on the evidence referred to and findings made by this Tribunal as set out in paragraphs [139] to [148] and [194] to [252] to the effect that it does not have sufficient suitably qualified trainers and assessors available to deliver the VET training and assessment to its students in relation to its courses, the Tribunal finds that:
(a)Claredale does not meet the registration requirement under s 11(e) of the ESOS Act because the Tribunal considers that there is reason to believe (in fact, it finds that) both of subsections (e)(i) and (ii) apply to Claredale; and
(b)Claredale does not meet the registration requirement under s 11(b) of the ESOS Act because it is non-compliant with Standards 1 and 11 of the National Code of Practice for Providers of Education and Training to Overseas Students 2018, as currently in force.
Based on the evidence referred to and the findings made by this Tribunal as set out in paragraph [266] and [327], the Tribunal concludes that Claredale is not “fit and proper” to be registered as a CRICOS provider and does not meet the registration requirement under s 11(c) of the ESOS Act.
Section 11 of the ESOS Act requires that all of the registration requirements must be met before a provider may be registered as a CRICOS provider under the ESOS Act. As Claredale is non-compliant with at least three of those requirements (i.e. subsections 11(b), (c) and (e)), the Tribunal concludes that it is not eligible to be registered as a CRICOS provider and that its application for registration be refused.
The Tribunal affirms the refusal of registration decision relating to Claredale’s application for registration as a CRICOS provider under the ESOS Act.
conclusion
The Tribunal affirms the decisions under review.
| I certify that the preceding 333 (three hundred and thirty three) paragraphs are a true copy of the reasons for the decision herein of Member K. Parker |
..[sgd]......................................................................
Associate
Dated: 12 July 2019
Dates of hearing:
10 & 11 July 2018
Counsel for the Applicant
Solicitors for the Applicant:
Ms Catherine Dermody
GPZ Legal
Counsel for the Respondent: Ms Elizabeth Bennett Solicitors for the Respondent: Mr D Cox, In-house Counsel, ASQA
ANNEXURE A[160]
[160] Refer T-Documents pages 147-152.
1
2
0