Ella Early Education Pty Ltd and Secretary, Department of Education

[2023] AATA 287

Ella Early Education Pty Ltd and Secretary, Department of Education [2023] AATA 287 (28 February 2023)

Division:GENERAL DIVISION

File Number:          2021/8179

Re:Ella Early Education Pty Ltd

APPLICANT

AndSecretary, Department of Education

RESPONDENT

Decision

Tribunal:Mr A. Maryniak KC, Member

Date:28 February 2023

Place:Melbourne

The Tribunal affirms the reviewable decision dated 7 October 2021.

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

Mr A. Maryniak KC, Member

Catchwords

CHILD CARE - Family assistance law - Application for approval as an approved childcare service - Whether Applicant is a fit and proper person to be involved in the administration of CCS and ACCS - Whether sole director with management or control of the Applicant is a fit and proper person to be involved in the administration of CCS and ACCS - decision affirmed

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)

Secondary Materials

Child Care Subsidy Minister's Rules 2017 (Cth)

REASONS FOR DECISION

Mr A. Maryniak KC, Member

28 February 2023

BACKGROUND

1. The Applicant seeks review of a decision affirming a prior refusal to approve its application to be an approved provider of a child centre-based day care service known as ‘long day care’, pursuant to s 194B(6) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Act).

2. Upon its initial application for approval on 18 February 2020, the Applicant had two directors with management or control of it: Ms Al Hassany and Ms Eldimerdash. That application was supported by minimal documentation.

3. On 21 February 2020 the Applicant submitted further ‘relevant documents’ to be considered in support of its application. On 19 March 2020 the Applicant submitted further documents, stating it had ‘updated our policies’, and requesting that the Respondent’s Department ‘disregard our email sent on the 21^st of February 2020’. These documents were said to be ‘updated policies to go alongside our CCS application’.

4. On 25 March 2020 the Respondent notified the Applicant by email that the 18 February 2020 application was incomplete and sought further documents from the Applicant. In April 2021 the Applicant’s directors were invited to attend a written assessment later that month.  On 14 April 2021 Ms Al-Hassany confirmed her attendance but indicated that Ms Eldimerdash was no longer a person in management or control of the Applicant. Subsequent company extracts obtained by the Respondent indicated Ms Eldimerdash ceased acting as a director of the Applicant on 12 April 2021.

5. On 11 June 2021 the Respondent’s delegate found, inter alia, Ms Al-Hassany’s answers to the written assessment to be unsatisfactory and refused the Applicant approval. On 22 June 2021 the Applicant sought an internal review of the 11 June 2021 decision. And on 8 July 2021 the Applicant provided a further tranche of documents in support of its application.

6. Despite the Act being amended just before the hearing of this application, the parties agree that the provisions of the Act as they were, prior to the 16 December 2022 amendments, are to be applied.

   LEGISLATIVE FRAMEWORK

7. Part 8 of the Act sets out the framework for applying for approval of provider of childcare services. The decision maker may approve a provider if, inter alia, it satisfies the eligibility rules in s 194C.[1] Equally, approval must be refused if such rules are not satisfied.[2]  Relevantly, such rules will be satisfied if:

   (b) the provider is a fit and proper person to be involved in the administration of CCS and ACCS; and

   (c) any person with management or control of the provider is a fit and proper person to be involved in the administration of CCS and ACCS; and

   …

   (f) the provider satisfies any other criteria prescribed by the Minister’s rules. 

   The ‘Minister’s rules’ being the Child Care Subsidy Minister's Rules 2017 (Cth).

   [1] A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 194B (‘Admin Act’).

   [2] Ibid s 194B(6).

8. In determining the ‘fit and proper’ requirement, the Tribunal is to have regard to the arrangements the person has to ensure they, and anyone they manage, comply with the family assistance law.[3] The Tribunal must also have regard to ‘any other matter prescribed by the Minister’s rules’.[4] Sections 46(2) and (3) of the Minister’s rules set out further matters to be considered, relating to:

   (a)the experience and expertise of the provider or person with management or control in the provision of childcare services; and

   (b)the understanding that can be demonstrated by the provider or person with management or control, of the obligations that would apply under the family assistance law, and the level of commitment to complying with those obligations.[5]

   [3] Ibid s 194E(1)(g).

   [4] Ibid s 194E(1)(k).

   [5] Child Care Subsidy Minister’s Rules 2017 (Cth) ss 46(2)-(3).

   ISSUES

9. In issue before the Tribunal are the arrangements the Applicant (essentially Ms Al Hassany as the sole director) has in place:[6]

   (a)to ensure the person complies with the family assistance law; and

   (b)to ensure anyone the person is responsible for managing complies with the family assistance law.[7]

   [6] Admin Act (n 1) s 194E(1)(g).

   [7] Constituted by the A New Tax System (Family Assistance) Act 1999 and the A New Tax System (Family Assistance) (Administration) Act 1999 and instruments made under both Acts, the Child Care Subsidy Minister’s Rules 2017 and the Child Care Subsidy Secretary’s Rules 2017, and Schedules 5 and 6 to the A New Tax System (Family Assistance and Related Measures) Act 2000.

10. The Tribunal is to determine whether the Applicant satisfies the provider eligibility rules in s 194C. As part of that determination, the Tribunal is to consider whether the Applicant and Ms Al Hassany are fit and proper persons pursuant to s 194E of the Act.

    Submissions and consideration

11. The Tribunal has considered this application de novo taking into account all the documentary evidence before it, including the Applicant’s latest policy documents[8] (‘the Governance Documents’) and all earlier attempts at such documents, together with the oral evidence of Ms Al Hassany. The Tribunal has also considered the submissions of the parties.

    [8] Exhibit A1.

12. The written assessment is a voluntary tool used by the Respondent to assist the decision maker’s assessment of the matters under ss 46(2) and (3) of the Minister’s Rules and of the governance arrangements in place as referred to in s 194E(1)(g) of the Act. The Tribunal may also consider any other matter it considers relevant.[9]

    [9] Admin Act (n 1) s 194E(1)(l).

13. The Applicant submits there are three pillars to its case. The first is the latest Governance Documents which have been lodged with the Tribunal, being Exhibit A1. It submits this updated suite of governance documents are not seriously criticised by the Respondent; and hence such documents satisfy the requirements of s 194E(1)(g) of the Act. The Applicant submits that the Tribunal should place less weight upon the troubling result of the written assessment and the various attempts to provide satisfactory governance documents in the lead up to this hearing.

14. The Applicant submits that the latest Governance Documents should be given ‘far greater weight’ in satisfying the Tribunal that the Applicant has in fact now met the relevant considerations. It submits that the Tribunal, in considering s 194E(1)(g), should look at the ‘suitability’ of the latest Governance Documents relied upon by the Applicant[10] as the key evidence of the arrangements the Applicant has in place to ensure that it complies with the family assistance law. 

    [10] Exhibit A1.

15. The second pillar is the oral evidence of Ms Al Hassany and the third is the fit and proper person criteria of s 194E. The Applicant submits that Ms Al Hassany, through her evidence, has demonstrated her experience in running childcare centres. This experience includes working as a centre director for two other childcare centres in the past and familiarity with the use of various relevant software. Essentially, it is put that by her oral evidence given at the hearing, she has established that she has all the requisite skills and knowledge, in contrast to the substantial deficiencies evident in the lead up to the hearing before the Tribunal.

16. The Applicant referred the Tribunal to the Child Care Provider Governance Requirements.[11] It includes a requirement that an organisation ‘has sufficient governance to protect the integrity of public funds they will administer and to ensure ongoing compliance with the family assistance law’.[12] Further, ‘the provider must be able to demonstrate that their organisation has sufficient administrative processes (i.e. governance) to be responsible for the CCS and Additional Child Care Subsidy (ACCS) payments’.[13] The Tribunal notes that the CCS Service Government Statement[14] requires a provider to be ‘able to demonstrate sufficient governance arrangements to ensure compliance with family assistance law’[15] for CCS approval.

    [11] Exhibit R2, ST1.

    [12] Ibid 532.

    [13] Ibid 533.

    [14] Exhibit R2, ST2.

    [15] Ibid 536.

17. In summary, the Applicant submits it is the latest Governance Documents that matter most as this is a de novo hearing. As such, the history of the Applicant’s previous attempts at providing such documentation should be given minimal weight by the Tribunal. Further, the written test is just ‘a relevant bit of information’.[16] The Applicant also submits that Ms Al Hassany demonstrated in her oral evidence her competence and understanding of how CCS compliance and reporting will work in practice; and that she has over 19 years of experience in the sector, including one instance where she dealt directly with the Respondent in a situation where two centres were claiming one child.

    [16] Transcript of Closing Submissions dated 20 December 2022 (Transcript), P-19.

18. The Applicant directed the Tribunal to the Business Plan within the Governance Document[17] as detailed evidence of how Ms Al Hassany proposed the business would operate in practice, and the social need in the Broadmeadows area region for such services.

    [17] Exhibit A1, 211-244.

19. In contrast, the Respondent highlighted the substantial contributions of consultants to the Business Plan as well as the remainder of the latest Governance Documents. It also highlighted the fact that Ms Al Hassany did not do well in the written assessment, despite her many years of experience in the childcare sector. The Respondent submits that it is open to the Tribunal to conclude from Ms Al Hassany’s oral evidence that she is ‘relatively easily confused’ and that there are ‘significant doubts regarding her capacity to manage’[18] such a childcare business which would involve oversight of the expenditure of millions of dollars of Commonwealth funds each year.

    [18] Transcript P-22.

20. It also submits that Ms Al Hassany’s experience is limited, particularly in respect of the preparation of accurate and complete reporting giving rise to the payment of government subsidies. Essentially, the Respondent says she has no relevant experience.

21. The Respondent also pointed to the three previous attempts by the Applicant to provide a satisfactory set of policy Governance Documents; and that the latest version relied upon is significantly different, more detailed, and essentially prepared by external consultants assisting Ms Al Hassany.

22. The Respondent submits that s 194E(1)(g) should be read more widely than suggested by the Applicant. It submits that the ‘arrangements’ relevant for consideration include how the particular governance documents will be utilised, implemented and applied by the person involved in the day-to-day running of the business.

23. In summary, the Respondent submits that having regard to the totality of the evidence before the Tribunal, including Ms Al Hassany’s less than impressive performance in the witness box, and the numerous attempts at preparing the requisite policy documents, the Tribunal should find against the Applicant.

24. The Tribunal agrees that Ms Al Hassany was not an impressive witness. Even allowing for nerves associated with her first experience at giving evidence in a tribunal, she had little grasp of the detail as to various aspects of the preparation and status of earlier drafts of the documents she lodged with the Respondent in support of her application for provider approval. More concerningly, despite reminders from the Tribunal as to the importance of the task, she recast various aspects of her evidence during the hearing.  

25. In addition to Ms Al Hassany’s troubling performance as a witness during the hearing, the Tribunal notes that it was submitted on her behalf on 21 November 2022 that she ‘…has continued to engage and work closely with an external consultant with expertise in childcare services, Ms Valerie Tillett of Evolve Consultancy, to assist in the amendments to the governance documents’. Reference was also made to her affidavit sworn 5 October 2022, where she deposed that the Applicant had ‘arranged for an external consultant, Ms Valerie Tillett of Evolve Consultancy to conduct a review and update of the relevant policy documents’.[19] It was further submitted on 21 November 2022 that Ms Al Hassany would:

    …also give evidence that she intends to engage Ms Valerie Tillet on an ongoing basis to:

    (a) act as a mentor and provide support as required in the operation of the Service for a period of at least 6 months in the event Ella is granted CCS Approval; and

    (b) to review and update Ella’s governance documents on a quarterly basis and to audit their practices.

    This further demonstrates the Applicant’s arrangements to ensure compliance with the family assistance law.

    [19] Applicant’s Statement of Facts, Issues and Contentions (SFIC) dated 21 November 2022 [21]; Exhibit A1: Affidavit of Ms Al Hassany sworn 5 October 2022 [73].

26. However, during the hearing Ms Al Hassany gave evidence that she had engaged a different set of consultants from about July 2022; and that the latest policy documents were the result of the assistance of those new consultants. Obviously, there is a tension between her testimony and the earlier submissions and affidavit evidence discussed above. Neither of the latter mention the fact that, as Ms Al Hassany testified, Ms Tillett’s services had been dispensed with during the second half of 2022. The Applicant’s evidence is lacking in the important detail regarding the use of various consultants and the extent of their input. Such detail is not before the Tribunal.  Counsel for the Applicant, when questioned by the Tribunal during closing, accepted this deficiency in the Applicant’s evidence.[20]

    [20] Transcript, P-6.

27. The evidence of Ms Al Hassany’s experience as a centre director for two other centres was limited. It does not support a finding of substantive experience in ensuring that key reporting to the Respondent will be accurate and complete regarding the payment of childcare subsidies and disbursement of Commonwealth funds. Further, the initially substantially incomplete documents and the versions that followed, prior to the latest Governance Documents, were clearly not of a satisfactory standard.

28. The latest Governance Documents relied upon are significant and qualitatively different from the preceding versions, yet the Applicant’s evidence is lacking with respect to her input into their creation. There is also a scarcity of evidence as to how she will manage the business in the future, should she be permitted to do so.

29. The Tribunal is not satisfied that the Governance Documents are the result of sufficient work and input from Ms Al Hassany. The Tribunal is also not satisfied that such documents are a true indication of the skills and abilities of Ms Al Hassany. There is insufficient evidence before the Tribunal to support such a finding. Further, the Tribunal finds, as the Respondent submitted, that s 194E(1)(g) should be read more widely than submitted by the Applicant. The ‘arrangements’ to be considered by the Tribunal include how the Governance Documents will be utilised, implemented, and applied by the person involved in the day-to-day running of the Applicant’s business.

30. Upon balancing all the evidence before the Tribunal and considering the submissions of the parties, the Tribunal is not satisfied that Ms Al Hassany, and hence the Applicant, has the requisite experience and expertise under s 46(2), nor the requisite understanding of the obligations and level of commitment under s 46(3) of the Minister’s Rules. The less-than-optimal results of Ms Al Hassany’s written assessment identified deficiencies in her knowledge of the CCS System, session reports, statement of entitlement and fees, and reporting sessions of care. Unsatisfactory responses were also given in respect of obligations for continued approval under the family assistance law, fraud risks, and proper mitigation strategies and practices to prevent fraud. Hence, the Tribunal finds that the Applicant has not satisfied ss 194E(1)(g) and 194E(1)(k).

31. Whilst the Tribunal acknowledges Ms Al Hassany was experiencing some personal difficulties at the time she completed the test, the results nonetheless cannot be ignored. When combined with the numerous attempts at lodging satisfactory policy documents, Ms Al Hassany’s unsatisfactory evidence given in this regard, and the unknown extent upon which Ms Al Hassany had to rely upon various consultants to prepare the latest version of policy documents which the Applicant relies upon, the Tribunal is not satisfied on the evidence before it that the Applicant is, on balance, a fit and proper person to be involved in the administration of CCS and ACCS, as required under the Act. This combination is not outweighed by the latest Governance Documents relied upon by the Applicant.

    DECISION

32. The correct or preferable decision is to affirm the decision under review, and the Tribunal does so.

I certify that the preceding 32 (thirty-two) paragraphs are a true copy of the reasons for the decision herein of Mr A. Maryniak KC, Member

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Associate

Dated: 28 February 2023

Date(s) of hearing:	20 December 2022
Counsel for the Applicant:	Mr Thomas Liu
Solicitors for the Applicant:	Mills Oakley
Advocate for the Respondent:	Mr David Brown
Solicitors for the Respondent:	The Australian Government Solicitor