Equanimity Consultants Pty Ltd and Australian Skills Quality Authority - [2020] AATA 2657

Equanimity Consultants Pty Ltd and Australian Skills Quality Authority [2020] AATA 2657 (12 June 2020)
Division:GENERAL DIVISION
File Numbers: 2020/3146; 2020/3147
Re:Equanimity Consultants Pty Ltd
APPLICANT

AndAustralian Skills Quality Authority
RESPONDENT

DECISION
Tribunal:R Cameron, Senior Member
Date of Decision: 12 June 2020
Date of Written Reasons: 6 August 2020
Place:Melbourne

UPON APPLICATION of the Applicant lodged on 22 May 2020 for review of decisions of the Respondent dated 5 May 2020 AND UPON application of the Applicant on                  22 May 2020 for a stay of the operation of those decisions IT IS ORDERED by the Tribunal that:

Pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975, that until further order of the Tribunal, or the final hearing and determination of this Application:
1.    the operation of the Respondent’s decisions of 22 May 2020 is stayed; and
2.    the Applicant is not to enrol any new students in the units or courses the subject of the Application.

.....................[sgd]..............................................
R Cameron, Senior Member
Catchwords
Practice and Procedure – whether to grant stay order – whether to impose condition on stay order - consideration of relevant principles – balance of considerations – where public interest considerations outweigh countervailing considerations – stay granted with conditions
Legislation
Education Services for Overseas Students Act 2000
National Vocational Education and Training Regulator Act 2011
Cases
Re Bundy and Anor v Australian Securities and Investments Commission
Re Repatriation Commission v Delkou (1985) 8 ALD 454
WRITTEN REASONS FOR DECISION
R Cameron, Senior Member
6 August 2020
INTRODUCTION.

The Applicant seeks review of two decisions in this Tribunal made by the Respondent on 5 May 2020 (“the reviewable decisions”).
The first decision was to reject under section 17 of the National Vocational Education and Training Regulator Act 2011 (“NVR Act”), part of the Applicant’s application for renewal of registration as a Registered Training Organisation.
The second decision cancelled under section 83(3)(c) of the Education Services for Overseas Students Act 2000 (“ESOS Act”) part of its registration by removal of two qualifications from its CRISCOS Scope of Registration.
The Applicant applied for a stay of the implementation of both the first and second decisions pending the hearing and determination of this matter before the Tribunal.
After a contested interlocutory hearing on 9 June 2020, the Tribunal granted a stay of the implementation of both the first and second decisions. The Respondent sought the implementation of a condition on such stay. The condition sought by the Respondent was that the Applicant was not to enrol any new students in the units or courses which were the subject of the Application pending its final hearing and determination. Consequently, the matter was adjourned until 12 June 2020 for a further interlocutory hearing on the question of whether or not that condition should be attached to the stay granted by the Tribunal.
After a further contested interlocutory hearing on 12 June 2020, the Tribunal imposed a stay with the condition that the Applicant is not to enrol any new students in the units or courses the subject of the Application, pending the final hearing and determination of the Application before it.
The Tribunal gave ex tempore reasons on 12 June 2020. The Applicant has sought reasons in writing under what it says is section “43(A)” of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”). Despite this error the Tribunal assumes that the Applicant’s solicitors mean section 43(2A) of the AAT Act. These reasons are furnished pursuant to this request.
THE MATERIAL BEFORE THE TRIBUNAL.
The following material was before the Tribunal:
(a)An affidavit of James Ryan and exhibits thereto sworn 11 June 2020;
(b)A supplementary affidavit of James Ryan and support of application for the stay order sworn 11 June 2020 and exhibits thereto;
(c)An affidavit of Monica McFadyen, (“McFadyen”) Principal Regulatory Operations Officer (Audit), Australian Skills Quality Authority dated 4 June 2020;
(d)Audit report: Equanimity Consultants Pty Ltd carried out by the Respondent and dated 28 August 2019;
(e)Evidence Review Report: Equanimity Consultants Pty Ltd prepared by the Respondent (dates of review 20 March 2020 - 14 April 2020) and created on 24 April 2020; and
(f)Respondent’s Outline of Submissions - Stay Condition.
CONSIDERATION.
Section 41(2) of the AAT Act gives the Tribunal a discretion to make such order or orders staying or otherwise affecting the operation or implementation of a decision to which an application relates. Under subsection (6) of that section the Tribunal is also empowered to impose such conditions as it sees fit, specified in the order. This power has been observed by some as an endeavour to tailor a stay order to suit the circumstances of the case. This is indeed part of what is considered to be a broad construction that should be applied to the sections to enable its adaption to a wide variety of situations that arise in the diverse review jurisdiction of the Tribunal conferred by numerous statutes.[1]
[1] Re Repatriation Commission v Delkou (1985) 8 ALD 454.
With this broad and flexible power to grant a stay conferred by the provisions of the AAT Act in mind, it is also appropriate to consider the objects of both the NVR and the ESOS Acts. These objects elevate, to a significant level, public interest considerations.
The objects of the NVR Act are as follows:
2A Objects
The objects of this Act are:
(a)       to provide for national consistency in the regulation of vocational education   and training (VET); and
(b)       to regulate VET using:
(i)        a standards-based quality framework; and
(ii)       risk assessments, where appropriate; and
(c)       to protect and enhance:
(i)        quality, flexibility and innovation in VET; and
(ii)       Australia’s reputation for VET nationally and internationally; and
(d)       to provide a regulatory framework that encourages and promotes a VET                system that is appropriate to meet Australia’s social and economic needs   for a highly educated and skilled population; and
(e)       to protect students undertaking, or proposing to undertake, Australian VET   by ensuring the provision of quality VET; and
(f)        to facilitate access to accurate information relating to the quality of VET.
“Part 1-Preliminiary” of the “Standards for Registered Training Organisations (RTOs) 2015” provides that the purpose of the Standards is to:
1.        Set out the requirements that an organisation must meet in order to be an            RTO;
2.         Ensure that training products delivered by the RTOs meet the    requirements of training packages or VET accredited courses, and have   integrity for employment and further study; and
3.        Ensure RTOs operate ethically with due consideration of learners’ and                   enterprises’ needs.
The objects of the ESOS Act are as follows:
4A Objects
The principal objects of this Act are:
(a)       to provide tuition assurance, and refunds, for overseas students for    courses for which they have paid; and
(b)       to protect and enhance Australia’s reputation for quality education and                   training services; and
(c)       to complement Australia’s migration laws by ensuring providers collect and           report information relevant to the administration of the law relating to   student visas”.
The Applicant sought renewal of its registration as a Registered Training Organisation (“RTO”). An RTO is required to comply with the contents of a legislative instrument known as the “Standards for Registered Training Organisations (RTOs) 2015” (“Standards for RTO’s”). The Standards for RTO’s form part of what is known as the “VET Quality Framework”, a system which ensures the integrity of nationally recognised qualifications.
The purpose of the Standards for RTO’s is threefold. Firstly, to set out the requirements that an organisation must meet in order to be an RTO. Secondly, to ensure that the training products delivered by RTO’s meet the requirements of training packages or VET accredited courses and have the integrity for employment and further study. Thirdly, to ensure RTO’s operate ethically with due consideration of learners’ and enterprises’ needs[2]. The Standards for RTO’s are divided into four parts namely “Part 1-Preliminary”, “Part 2-Training and assessment”, “Part 3-Obligations to learners and clients” and “Part 4-RTO governance and administration”. There are six Schedules to the Standards for RTO’s.
[2] The purpose of the Standards for RTO’s is contained in "Part 1-Preliminary."
The Standards for RTO’s prescribe several standards at a high level in conformity with the objects of both the NVR Act and those prescribed in the legislative instrument itself. Amongst others Standard 8 contained in “Part 4-RTO governance and administration” requires that the RTO cooperate with the VET Regulator (Australian Skills Quality Authority) and is legally compliant at all times.
Clause 8.1 (b) provides that:
To be compliant with Standard 8 the RTO must meet the following: 8.1 The RTO cooperates with the VET Regulator … in the conduct of audits and the monitoring of its operations.
Commensurate with the objects of both the NVR and the ESOS Acts, not to mention the Standards for RTO’s, as was noted by Tamberlin J in Re Bundy and Anor v Australian Securities and Investments Commission[3] in the context of a stay application, the need to protect consumers and customers is a matter of particular importance when assessing public interest impacts.
[3] [2013] AATA 59.
The Respondent also referred to a decision of Senior Member McCabe (as he then was), in Metro College of Technology Pty Ltd v Australian Skills Quality Authority[4] in which he made the following observations:
A decision that is subject to review remains on foot and may be implemented unless and until the Tribunal makes an order under section 41 (2) of the AAT Act 1975 to stay the operation or implementation of the decision. The power under section 41 (2) is exceptional. It is not intended to simply protect an applicant from the consequences of a decision. The power is ultimately provided for the purpose of securing the effectiveness of the hearing and determination of the application for review. When considering whether it is desirable to make a stay order for the ultimate purpose, the Tribunal must take into account the interests of any person who might be affected by the review.
(emphasis added)
[4] (Administrative Appeals Tribunal, Senior Member McCabe, 24 December 2015).
The observations of Senior Member McCabe concerning the approach to be adopted when construing and applying section 42(2) is apposite to the task faced by the Tribunal in this aspect of the application, and in deciding whether or not to impose conditions to a stay order. In this case, that requires taking into consideration the interests of the public and the Applicant and weighing them up in a balancing exercise.
The Respondent placed significant emphasis on the history of this matter and the relevant conduct of the Applicant throughout the course of such history. It is useful to recount the key events in this process.
Consequent to the Applicant making such an application as is the case here, the Respondent Australian Skills Quality Authority (commonly known as “ASQA”) conducted what is described as a “Renewal Audit” of the Applicant’s operations. This step is commonly undertaken when such applications are made.
Following the completion of the Renewal Audit, the Respondent prepared an audit report on 28 August 2019. The audit report identified that the Applicant was non-compliant with the following requirements:
(a)Standards for RTO’s: 1.1, 1.2, 1.7, 1.8, 1.13, 1.14, 1.16, 2.3, 2.4, 3.1, 4.1, 5.1, 5.2, 5.3, 8.2 and 8.5; and
(b)ESOS National Code: clauses 6.3, 6.4 and 11.2.
Following the completion of the audit report, the Respondent gave notice to the Applicant on 11 October 2019 of its intention not to renew the Applicant’s VET registration. The notice of 11 October 2019 included, as it was required to do under section 37 of the NVR Act, an invitation to the Applicant to provide the Respondent a response, or further evidence as it may consider appropriate, that would establish compliance with the Standards for RTO’s and the ESOS National Code.
In response to the 11 October 2019 request from ASQA, the Applicant provided further evidence which was reviewed by the Respondent. After consideration of the further evidence furnished by the Applicant another report was prepared by the Respondent which concluded that the Applicant remained non-compliant with a number of requirements. It was found to be non-compliant with the following requirements:
(a)Standards for RTO’s: 1.7, 1.1, 1.2, 1.3, 1.8, 1.14, 5.1, and 8.3; and
(b)ESOS National Code: clauses 6.3, 6.4 and 11.2.
By written notice given on 30 January 2020, ASQA notified the Applicant that it had decided to partially renew its registration and remove two qualifications from its CRICOS Scope of Registration (“the decisions”). The Respondent having made those decisions, triggered a right of review on the part of the Applicant under Part 9 of the NVR Act.
The Applicant exercised its right under Division 1 of Part 9 of the NVR Act, to seek a reconsideration of the decisions. As it was entitled to do, it submitted further evidence to be taken into account by ASQA when undertaking the reconsideration.
ASQA considered the further material furnished by the Applicant and undertook the reconsideration as it was obliged to do, between 20 March 2020 and 14 April 2020. After undertaking the reconsideration of the decisions as requested an “Evidence Review Report” was created on 24 April 2020. The result of the reconsideration as recorded in the Evidence Review Report, was that the Applicant remained non-compliant with the following requirements:
(a)Standards for RTO’s: 1.1, 1.3, 1.7, 1.8, 1.14 and 8.3; and
(b)ESOS National Code: clauses 6.3, 6.4 and 11.2.
On 5 May 2020, following the reconsideration, ASQA advised the Applicant that the decisions were affirmed. It is these decisions that are the reviewable decisions for which review in this Tribunal is sought by the Applicant.
Ms McFadyen who conducted the reconsideration review of the decisions has sworn an affidavit. In that affidavit she explains the process that she conducted when undertaking the reconsideration review. Included in that process was an assessment of the further evidence submitted by the Applicant to ASQA in March 2020. Having undertaken that assessment, she considered that the Applicant had not demonstrated that it was compliant.
There are several matters that emerge from the affidavit of Ms McFadyen and the Evidence Review Report that are of concern. They will not be identified in detail for the purposes of these reasons. However, some of the more serious concerns will be referred to. In the process of conducting her reconsideration review Ms McFadyen deposes that she sampled assessment tools and several completed student assessments. Her findings are particularised in paragraph 7 of her affidavit. Some of the matters identified by her, on their face, represent significant non-compliance. By way of example, in paragraph 7.1 she records that: ‘the assessments did not address the relevant components of the units of competency.’ In paragraph 7.3 she deposes that insufficient assessment evidence was collected to confirm the validity of the assessment. Alarmingly, at paragraph 7.4 she notes that for one student’s assessment, the assessor marked the student as competent although the answers provided were incomplete.
Another matter identified from both the Audit and the Evidence Review Report were that at least three trainers and assessors who conducted student assessments did not hold applicable credentials for various periods.[5] The Applicant has sought to explain this non-compliance away by asserting that the trainers and assessors concerned were at all times supervised by someone who was appropriately qualified. More will be said about this later.
[5] The Tribunal will not name those individuals, but the details of these findings can be found at pages 33-37 of the Evidence Review Report.
Mr Ryan, a director of the Applicant, in his first affidavit sworn on 11 June 2020 deposes to the fact that it has retained the services of one Ms Raelene Bartlett from an organisation known as “RTO Doctor, Industry Consultant”, to assist it as it puts it, in identifying and understanding the matters with which it was non-compliant as identified in the Evidence Review Report. He further deposed that together with Ms Bartlett, the Applicant has developed a response to the findings contained in that report (“the response”). The response which comprises 84 pages is exhibit “JR-5” to that affidavit.
Mr Galatas, who appeared on behalf of the Applicant, asserted by reason of the contents of the response prepared by the Applicant in conjunction with Ms Bartlett the instances of non-compliance identified in the Evidence Review Report have been rectified and that it is now compliant. He contends that a stay order granted by the Tribunal should not be subject to any conditions and as he puts it, the status quo should be preserved.
Mr Lloyd, on behalf of ASQA, disputed these contentions and contended that a condition should be imposed. Such condition being that there be no new enrolments of students in the subjects concerned. He did so in several ways.
The Respondent relied upon the extensive history of this matter, commencing with the initial audit and subsequent report, through to the reconsideration decision and the production of the response at the eleventh hour on the day before the first date fixed for hearing of the stay application, as a factor weighing heavily against the exercise of a discretion in favour of the Applicant not to impose conditions with the stay order.
It also highlighted that an examination of much of the material did not necessarily reveal compliance, nor was it supported by any corroborative evidence beyond the statements in submissions contained within it.
A further submission was made that the Tribunal, in considering whether to attach conditions including one of no new enrolments to the stay order, should have regard to achieving a proper balance between the requirements of public interest considerations and the commercial interests of the Applicant. Therefore, properly weighing up these considerations, the public interest of students and consumers, not to mention potential employers of graduates from the Applicant’s RTO, is critical and requires those parties being quarantined from the Applicant’s recent poor compliance history. Therefore, the public interest considerations outweigh those of the Applicant.
The examples of non-compliance identified in the Evidence Review Report, and the specific instances referred to by Ms McFadden in her affidavit referred to above, are of significant concern. There has been no satisfactory explanation from the Applicant as to why assessments did not address relevant components of the units of competency, how trainers and assessors conducted student assessment without applicable credentials and how a student was marked as competent when the answers provided in an assessment were incomplete. It is just plainly inconceivable. Once the genie is out of the bottle, she cannot be put back in. In the context of the exercise of a discretion such as that conferred on the Tribunal by section 41(2) of the AAT Act it is a factor that weighs against the Applicant, and in favour of the imposition of conditions to the stay proposed by the Respondent. One should consider as paramount the objects of each of the applicable statutes in this matter and the Standards for RTO’s, which includes the protection of students undertaking, or proposing to undertake Australian VET by ensuring the provision of quality VET, not to mention the provision of a regulatory framework to meet Australia’s social and economic needs for a highly educated and skilled population. When one does so the matters identified in the Evidence Review Report (referred to above) reveal that for some time the Applicant’s conduct of its operations as an RTO fell well short of that required and did not conform with the objects of the applicable legislation and Standards for RTO’s.

The Tribunal considers that public interest considerations must assume primacy. Protection of students undertaking or proposing to undertake Australian VET is a critical object of the NVR Act. Prospective students, and for that matter prospective employers of graduates from the Applicant’s RTO, should be assured that the quality of tuition offered by the Applicant meets the objects of the applicable legislation and Standards for RTO’s which exist to ensure the provision of quality VET. The integrity of accredited training and assessment in Australia must be zealously guarded. The public interest demands nothing less.
If these objects of both the applicable statutes and standards relating to the vocational training regime are not adhered to, potential students run the risk of paying significant sums of money for courses that are not being properly taught, if such allegations are correct. Employers run the risk of recruiting staff who are not properly trained.
Another factor that weighs against the Applicant is, as contended for by the Respondent, that even putting the contents of the response to one side, this audit process has been on foot for the better part of the year. Despite no less than three opportunities to get its house in order, the Applicant has not done so, and is still producing material at the eleventh hour. It is not possible for the Tribunal, in an interlocutory proceeding, to rule definitively on the contents of the response. However, some issues with it have been highlighted. The late provision of the response must count against the Applicant when it comes to deciding whether to exercise the discretion to impose conditions with the stay.
Additionally, the Tribunal knows nothing about Ms Bartlett or her organisation “RTO Doctor, Industry Consultant”. We do not know what qualifications and experience she has in the VET or RTO sector. There is no affidavit from her. There is not even a separate report from her. At best, we have Mr Ryan’s evidence that the response was drafted together with her. Whilst the Tribunal has taken the contents of the document into account and it does address some matters, much of it is discursive and argumentative or contains such comments as apologies[6] or contains just a bare denial of non-compliance. No supportive or corroborative documentation for the statements contained in the response have been produced. This also weighs against the Applicant and in favour of the Respondent’s contention that conditions be attached to the stay order.
[6]See page 31 of the response.
Much emphasis was placed by Mr Galatas for the Applicant on the financial impact that the imposition of a condition attaching to the stay order of no enrolment of students will have upon it. This is acknowledged by the Tribunal. Indeed, Mr Ryan in his two affidavits deposes to this point. He also makes reference to what he calls reputational damage. The Tribunal acknowledges the force of this submission. However, they cannot be determinative. The reputational damage according to Mr Ryan occurs very quickly after action by the Respondent because once any sanction is taken against an RTO, it is published on the Respondent’s website. To quote him: “This news gets around the industry very quickly and causes significant reputational damage.” The Tribunal is very mindful of both the potential for financial impact and reputational damage. As for reputational damage, if details of the sanctions imposed or proposed by ASQA have been published on the Internet as is deposed to by Mr Ryan, it appears that reputational damage has already occurred. It realistically cannot be undone. However, even so these factors themselves cannot be sufficient to justify an exercise of the discretion in section 41 of the AAT Act in such a way as to deny or prevent the imposition of conditions attaching to a stay when it is appropriate to do so.
In terms of the financial impact, another factor that is apparent from the material and in particular the contents of the first affidavit sworn by Mr Ryan on 11 June 2020 is that the Applicant has significant reserves and assets to enable it to continue to remain financially viable, pending the hearing and determination of this application. Exhibit “JR-8” to Mr Ryan’s affidavit sworn on 11 June 2020 is a copy of the Applicant’s Profit and Loss Statement and Projection, its Balance Sheet (including the actual figures before the financial years 2018 and 2019 together with forecast figures for the 2020 financial year) together with Tax Returns for the last year. An analysis of these financial statements and in particular its balance sheet demonstrates a healthy net asset position together with a significant quotient of current assets, including cash at bank together with sundry and trade debtors.
The evidence of Mr Ryan is that the Applicant currently has 226 international students and 42 domestic students. He deposes that international students, including those who have been issued with confirmation of enrolment, will be unable to arrive in Australia and commence their courses for the foreseeable future due to the present COVID-19 restrictions. This is comparatively self-evident, and a further reason why the impact of a stay order with a non-enrolment condition attached will ultimately not have much of a different effect upon the Applicant.
As for domestic students, Mr Ryan deposes that as a result of ASQA notifying the State of Western Australia of the audit findings in August 2019, the Applicant has been unable to enrol any domestic students under an existing contract with that state government for seven months. He contends that if the stay is granted, there is a prospect that it may be permitted to re-enrol domestic students. However, this contention which is unsupported by any corroborative evidence such as correspondence from a State Government agency or other evidence from for instance, an officer of such an agency, is by no means apparent, and given the prohibition on doing so for the last seven months, it seems that the impact of a stay with conditions, whilst probably of some affect, in terms of timeframe will be more limited.
Two other factors were relied upon by the Applicant and also were deposed to by Mr Ryan in his affidavits. Firstly, is the impact on the Applicant because it has several leases and other arrangements concerning premises used to deliver training. Documentary evidence in support of this contention is contained in exhibit “JR-9” of his affidavit of 11 June 2020. The other matter deposed to by him was the impact on staff. It is contended that staff will leave because the Applicant will not be able to pay them.
The inability to enrol both international and domestic students as outlined previously, and of course deposed to by Mr Ryan, indicates that the impact experienced by the Applicant by reason of these matters was likely to occur anyway, or had occurred by reason of the actions of the Western Australian Government, coupled with the impact of the COVID-19 restrictions. With or without conditions attached to the stay, these impacts were likely to occur anyway, or have occurred.
On that note, as was mentioned at the time that ex tempore reasons were given by the Tribunal and as since confirmed, this matter is fixed for a final hearing of three days duration commencing on 7 September 2020 and concluding on 9 September 2020. As Mr Galatas stated, his client is “ready to go”. Therefore, the period during which the stay order is subject to conditions is comparatively brief, particularly in terms of the usual delays that one experiences between commencement of an application in this Tribunal and its final hearing and determination. This consideration was flagged at the time of giving the ex tempore reasons as a factor weighing in favour of imposing the conditions, in terms of striking a balance between public interest considerations as articulated earlier in these reasons, and the interests of the Applicant as outlined in the submissions of Mr Galatas and the material lodged on behalf of his client.
DECISION
By reason of the foregoing matters the Tribunal has decided to impose the conditions with the stay order that the Applicant is not to enrol any new students in the units or courses the subject of the Application pending its final hearing and determination.

I certify that the preceding 51 (fifty-one) paragraphs are a true copy of the reasons for the decision herein of R Cameron, Senior Member.

......................[sgd]...............................
Associate
Dated: 6 August 2020

Dates of interlocutory hearing: 9 June 2020 & 12 June 2020

Solicitor for the Applicant: Mr Nick Galatas

Solicitor for the Respondent: Mr Tim Lloyd

Dates of interlocutory hearing:	9 June 2020 & 12 June 2020
Solicitor for the Applicant:	Mr Nick Galatas
Solicitor for the Respondent:	Mr Tim Lloyd