Focal Holdings Pty Ltd v NSW Vocational Education and Training Accreditation Board
[2010] NSWADT 226
•14 September 2010
CITATION: Focal Holdings Pty Ltd v NSW Vocational Education and Training Accreditation Board [2010] NSWADT 226 DIVISION: General Division PARTIES: APPLICANT
RESPONDENT
Focal Holdings Pty Ltd
NSW Vocational Education and Training Accreditation BoardFILE NUMBER: 103010 HEARING DATES: 17, 18, 19, 20 & 21 May 2010 SUBMISSIONS CLOSED: 21 May 2010
DATE OF DECISION:
14 September 2010BEFORE: Hennessy N - Magistrate (Deputy President); Burke T - Non-Judicial Member CATCHWORDS: VOCATIONAL EDUCATION - Cancellation of registration and approval - whether applicant’s ethical standards warrant registration and approval LEGISLATION CITED: Vocational Education and Training Act 2005
Administrative Decisions Tribunal Act 1997CASES CITED: Sydney Business Institute Pty Ltd v NSW Vocational Education and Training Accreditation Board [2009] NSWADT 322
Austech Institute for Further Education v Vocational Education and Training Accreditation Board [2009] NSWADT 323REPRESENTATION: APPLICANT
RESPONDENT
M Cleary, barrister
P Cribb, solicitorORDERS: 1. The respondent’s decision to cancel the applicant’s registration as a training organisation is set aside
2. The respondent’s decision to refuse the applicant’s application for renewal of registration as a training organisation is set aside. In substitution for that decision a decision is made to register the applicant as a training organisation
3. The respondent’s decision to cancel the applicant’s approval to provide courses to overseas students is set aside.
4. The respondent’s decision to refuse the applicant’s application for renewal of approval to provide courses to overseas students is set aside. In substitution for that decision a decision is made to approve the applicant to provide the courses to overseas students for which it had approval prior to the decisions under review being made. The approval is made on condition that the courses be conducted from the Greenfield Parade, Bankstown premises occupied by the applicant. In addition, the maximum number of students that can be enrolled and studying at those premises is 350
5. The respondent’s decision to impose a condition on the applicant to prevent it from recruiting or enrolling any new students is set aside.
REASONS FOR DECISION
Introduction
1 Focal Holdings Pty Ltd (Focal) provides education and training to domestic and overseas students. Ms Elizabeth Absolon is the sole director and chief executive officer of the company. Focal has applied to the Tribunal for a review of five decisions made by the NSW Vocational Education and Training Accreditation Board (VETAB) pursuant to the Vocational Education and Training Act 2005 (VET Act). The five decisions, which were made on 17 August 2009, were to:
a) cancel Focal’s registration as a training organisation: VET Act , s 18(1)(d);
b) refuse Focal’s application for renewal of registration as a training organisation: VET Act , s 12(1)(b);
c) cancel Focal’s approval to provide courses to overseas students: VET Act , s 35(1)(d);
d) refuse Focal’s application for renewal of approval to provide courses to overseas students: VET Act , s 34(1); and
e) impose a condition on Focal to prevent it from recruiting or enrolling any new students: VET Act , s 35(1)(c).
2 Following an internal review on 27 January 2010, the decisions were affirmed. We refer to the first four decisions as the ‘cancellation decisions’ and to the fifth decision as the ‘no new business’ condition. The Tribunal has power to review these decisions: VET Act, s 47(g), (a), (q), (n) and (o).
3 Focal provided further material to VETAB after it had applied to the Tribunal for a review of the decisions. After considering that material, the only basis on which VETAB now relies in support of its decisions is that Focal’s “ethical standards” are such that registration and/or approval are not warranted if it were applying for registration or approval now: VET Act, 18(2)(e) and s 34(7)(c).
Focal’s ethical standards
4 Focal had approval from VETAB to provide courses to 350 overseas students at its Greenfield Parade, Bankstown site. When VETAB made its cancellation decisions 1,389 overseas students were enrolled and were studying at several sites. The conduct which was said to reflect adversely on Focal’s ethical standards was that it operated from those sites without approval and had considerably more than 350 students enrolled. In particular, despite being told by VETAB that Focal needed to apply in ‘proper form’ for those approvals, Ms Absolon declined to do so. Ms Absolon denied that this conduct was unethical and said that she did not submit an application for approval in ‘proper form’ because there was no legislative basis for requiring such an application. She also said that VETAB was aware that she was operating from those sites and had all the information it needed to assess those sites but did not do so.
5 VETAB cross-examined Ms Absolon about several other matters. Those matters included:
a) the circumstances in which Ms Absolon’s employment with the Department of Education and Training was terminated in 1995;
b) Ms Absolon’s complaint to the Department and the relevant Minister about the conduct of a Departmental employee;
c) Ms Absolon’s claim for compensation from the Department for $200,000; and
d) Ms Absolon’s refusal to provide VETAB with a copy of Focal’s Business Plan.
6 Our understanding was that these matters were said to reflect adversely on her credit rather than constituting further examples of low ethical standards. In other words, those matters were said to be relevant to whether or not Ms Absolon was telling the truth about the fact that she was operating from several sites without approval and with enrolments in excess of 350 students. Even if VETAB intended those matters to be regarded as further examples of low ethical standards, we do not consider it fair to Ms Absolon to take those matters into account when they arose up to 15 years ago. Furthermore, Ms Absolon was never put on not notice by VETAB until the hearing that it considered that these matters would justify the decisions.
7 Assuming that these matters were put forward as reflecting adversely on Ms Absolon’s credit, they are of little relevance because there was only one factual issue involving Ms Absolon that was in dispute. The factual issue was whether, at a mediation in relation to previous proceedings between the same parties, VETAB’s representatives agreed that they ‘would not unreasonably withhold’ approval for the additional sites. Ms Absolon says that that was agreed whereas VETAB says that it was not. We have made a finding which is inconsistent with Ms Absolon’s version. However, that finding was not based on the assumption that Ms Absolon was not telling the truth. Rather, it was based on a finding that she misunderstood or did not accurately recall what had transpired in the mediation. Consequently, it has not been necessary to consider the matters listed above as it was not necessary to make a finding as to her credibility.
8 The same conclusion applies to challenges to Sarah Dew’s credit. Ms Dew is an auditor engaged by VETAB. Mr Cleary, representing Focal, attempted to impugn her credit by asking her numerous questions about the audit report she prepared in relation to Focal in the second half of 2008. She admitted to overlooking certain material and to making other errors in that report. The only factual issue which was in dispute relating to Ms Dew was whether, at a meeting between representatives from Focal and the Commonwealth Department of Education and Training at which Ms Dew was an observer, Ms Absolon said that Focal had imposed its own moratorium on enrolling new students for commercial reasons. Ms Absolon says that that issue was discussed whereas Ms Dew says that she cannot remember it being discussed. The fact that Ms Dew may have overlooked some information and made other errors when preparing the audit report does not affect her credit on the issue of what she recalls being said at the meeting with Commonwealth Departmental representatives.
Legislative Framework
The VET Act has the following objects (s 3):
(a) to establish a registration and accreditation framework for vocational education and training, in particular by applying nationally agreed standards,
(b) to ensure the quality and integrity of vocational education and training in this State,
(d) to promote consistency of standards in vocational education and training,(c) to provide for the approval by the Board of persons (other than official universities) to provide courses for overseas students (such approval forming the basis for registration under the Education Services for Overseas Students Act 2000 of the Commonwealth),
(e) to encourage the recognition of vocational courses that are accredited under this Act.
. VETAB’s powers are set out in the VET Act. They include the power, under Part 3, to cancel the registration of a training organisation and the power, under Part 4, to cancel approval for a training organisation to provide courses to overseas students. Two particularly relevant provisions in Part 4 are ss 34 and 35, relating to the cancellation of approval and the refusal to renew an approval:
34 Approval of persons to provide courses for overseas students
(1) The Board may, on the application of a person, approve the person to provide courses for overseas students.
. . .
(3) An application for approval to provide courses for overseas students must be in such form, and be accompanied by such fee, as the Board may determine.
(4) The Board may require an applicant to furnish further information in relation to the application.
(5) Approval may be granted unconditionally or subject to such conditions (which may be imposed when the approval is granted or at any later time) as the Board determines.
(6) Examples of the conditions that may be imposed include the following:
(a) conditions specifying the period for which the approval is to remain in force,
(b) conditions specifying the premises in or from which the course to which the approval relates are to be conducted,
(c) conditions requiring the payment (including periodic payment while the approval remains in force) of fees to the Board in respect of the approval.
(7) The Board must not refuse an application for approval except on one or more of the following grounds:
. . .
(c) that the applicant’s financial arrangements or ethical standards do not warrant the approval of the applicant,
35 Amendment, suspension or cancellation of approval
(1) The Board may, on its own motion or on the application of any person, do any of the following in relation to an approved provider:
. . .
(d) suspend or cancel the approval.
(3) The Board may not suspend or cancel an approval except on one or more of the following grounds:
. . .
. . .(e) the approved provider’s financial arrangements or ethical standards are such that they would not warrant the approval of the provider if it were now to apply for approval,
11 VETAB may issue guidelines to be adopted in relation to the approval of persons to provide courses for overseas students: VET Act, s 40(1). It was not in dispute that as at the date of VETAB’s decisions, it had issued the National Code of Practice Registration Authorities and Providers of Education and Training to Overseas Students 2007 (the National Code) as an approved guideline. Before making a decision under Part 4 of the VET Act, VETAB “must have regard” to the National Code: VET Act, s 36(3).
12 The regulatory framework was succinctly outlined by VETAB in its internal review decision dated 25 January 2010 at pages 6 and 7 as follows:
The provision of recognized training to overseas students is regulated by the Education Services for Overseas Students Act 2000 (Cth) (the ESOS Act). The ESOS Act establishes the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) and the National Code of Practice Registration Authorities and Providers of Education and Training to Overseas Students 2007 (the National Code).
By agreement with the Commonwealth Government, VETAB is responsible for auditing compliance of organisations with the ESOS Act, CRICOS and the National Code.
Under Part C of the National Code the designated authority (in this case VETAB) decides whether to approve the maximum number of students that provider can enrol. In making that decision, the designated authority will consider the capacity of the provider in terms of its premises, approved arrangements with other providers, facilities, resources, equipment, materials and ratio of staff student numbers. Following a successful application, VETAB updates the national database known as PRISMS (Provide a Registration and International Students Management System). Relevant state and federal authorities have access to PRISMS.Part 4 of the VET Act provides for the approval by VETAB of persons to provide courses for overseas students and that such approval forms the basis of registration of that provider under the ESOS Act and the National Code 2007.
13 The provisions of Part C of the National Code to which the internal reviewer was referring is paragraph 12.1 which states as follows:
Maximum number of students
12.1 As part of the registration approval process, the designated authority will decide whether to approve the maximum number of students that a provider can enrol. In making this decision, the designated authority will consider the capacity of the provider in terms of its premises, approved arrangements with other providers, facilities, resources, equipment, materials and ratio of staff to student numbers.
14 We note that approval to provide courses to overseas students is sometimes referred to as “CRICOS” approval.
15 We also note that when applying for initial registration or renewal of registration, each training organisation signs a declaration that binds it to operate in accordance with the AQTF 2007 Essential Standards for Registration. Those standards include the following Condition of Registration:
Interactions with the registering body
in the conduct of audits and monitoring of its operations.The RTO’s chief executive must ensure that the RTO cooperates with its registering body:
16 Tribunal’s role
. The Tribunal’s role is to determine whether VETAB’s decisions are the ‘correct and preferable’ decisions: Administrative Decisions Tribunal Act 1997(ADT Act), s 63. In determining that issue, the Tribunal must have regard to the material then before it, including any relevant factual material and any applicable written or unwritten law: s 63(1). The Tribunal ‘stands in the shoes’ of VETAB and may exercise all of the functions that are conferred or imposed on VETAB: ADT Act, 63(2). The Tribunal may affirm, vary or set aside VETAB’s decisions. The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: ADT Act, s 73(2).
Evidence and findings
17 Following initial registration and approval in 1995, Focal re-located to premises in Greenfield Parade, Bankstown in 2004. In December 2006 Focal applied to the Tribunal for a review of a decision permitting it to increase student capacity from 100 to 120 students at Greenfield Parade. Ms Absolon considered that those premises had the capacity to accommodate more students. The parties agreed to participate in mediation. At the mediation on 7 February 2007, an agreement was reached to increase the number of overseas students approved to study at the Greenfield Parade premises from 150 to 350. At that time another training organisation, Inter-Continental Colleges Pty Ltd, was also operating from the same site. The parties agreed to the following Terms of Settlement:
1. That Inter-Continental Colleges Pty Ltd approval for delivery at 7 Greenfield Parade Bankstown (the premises) be changed to 30 students (“X”).
2. That Focal Holdings Pty Ltd approval for delivery at the premises be changed to 350 students (“Y”).
3. The total number of 380 students is over three shifts.
4. The nominated figures for “X” and “Y” may be adjusted by written notice to VETAB with VETAB acknowledging that the two providers are operated by the same or similar management, and VETAB undertakes that it will not unreasonably withhold consent for the adjustment.
5. Focal Holdings will provide by 30 June 2007 a timetable for the courses for the period 1 July 2007 to 31 December 2007.
18 Discussions took place at the mediation in relation to other sites from which Focal was operating. Ms Absolon said that it was agreed orally at the mediation that VETAB would “not unreasonably withhold approval” in relation to those sites. Mr Cribb put to Ms Absolon that that was not agreed and that if it had been agreed, it would have featured in the Terms of Settlement. It was suggested to Ms Absolon that she may have been confusing VETAB’s agreement not to “unreasonably withhold consent” for an adjustment between number of students at Focal and the number at another College (see paragraph 4 of the Terms of Settlement). Ms Absolon disagreed.
19 It is clear from a passage in a letter that Ms Absolon wrote to VETAB dated 2 December 2008 that Mr Cribb’s suggestion as to the source of her confusion is correct. In that letter at page 3, Ms Absolon refers to an “adjustment” of the student numbers:
The mediation agreement provided that VETAB would not unreasonably withhold consent for the adjustment of student capacity approval, which in our view VETAB has done in not so much as considering our applications, or giving account of Sarah Dew’s inspection of Focal’s off site premises.
20 Ms Absolon’s reference to the mediation agreement and her use of the term “adjustment” makes it clear that she has misinterpreted or misunderstood paragraph 4 of the Terms of Settlement. That paragraph relates to an adjustment as between Focal and Inter-Continental Colleges Pty Ltd. It does not say that new applications for approval to provide courses at sites other that Greenfield Parade would not be unreasonably withheld.
21 On the basis of this letter, we are satisfied that there was no written or verbal agreement between Focal and VETAB at the mediation that VETAB would “not unreasonably withhold” approval to operate at new sites.
22 At the mediation VETAB’s officers provided Ms Absolon with an application form for approval to teach overseas students from the other sites. Ms Absolon said that that was the first time she was aware that VETAB required her to complete an application form. We accept that evidence. Ms Absolon said that it was her understanding that after she completed that form a VETAB officer would inspect the premises. While we accept that that was Ms Absolon’s understanding at the time, the correspondence she received from VETAB following the mediation could have left her in no doubt that she was required to apply in proper form before any inspection would take place.
23 Ms Absolon did not complete the form because she suspected that VETAB was singling her out for special treatment. She was suspicious because the form was not generally available on the web-site. Ms Dew explained that the form was not put on the website until April 2008 but that it was in use prior to that time. We are satisfied that VETAB was using the form it provided to Ms Absolon at the mediation and she was not being treated any differently from other registered organisations.
24 Following the mediation, Ms Absolon wrote to Ms Willis, the Director of VETAB, on 20 March 2007. In that letter she attached the relevant floor plans for the additional premises and provided information about their size and capacity. Ms Absolon wrote that:
We also note that you indicated that we were to provide you with additional documentation to substantiate the request for additional student numbers. However, we noted that the training areas at these premises are not being used to teach any courses/qualifications other than those already on our scope. The form that you provided at the mediation meeting requests the submission of complete audit documentation which simply duplicates all the documents that have been sighted and deemed compliant by VETAB auditors over the period of the protracted audit from April 2005 to date. We submit, therefore, that there is no requirement for us to provide Learning and Assessment Strategies, resources, teaching matrix, timetables, etc, a second time as these areas have all been assessed by the VETAB auditors as “compliant”.
25 She concluded the letter by asking Ms Willis if she could arrange for auditors to inspect the premises as a matter of urgency and increase the number of overseas students accordingly.
26 Ms Willis responded on 30 March 2007 advising that the applications were not in the form required, were not in good order and were incomplete. She wrote that an application form attaching supporting documents must be completed for each additional site. She quoted s 34(3) of the VET Act which states that:
An application for approval to provide courses for overseas students must be in such form, and be accompanied by such fee, as the Board may determine.
27 Ms Willis also noted Ms Absolon’s view that additional documentation was not required as the premises are to be used to teach courses/qualifications that have already been approved. She made it clear in the letter that further documentation was required because VETAB must take into account more than just the space allocated to the delivery of training qualifications and courses. In particular, VETAB must assess whether the particular requirements of the qualification or accredited courses are being met. She reiterated that an application form with supporting documentation needed to be provided for each additional site.
28 On 2 April 2007 Ms Absolon responded to this letter expressing the view that s 34(3) of the VET Act applies to applications for approval to provide courses to overseas student and does not require an application to be made to increase the number of students that can be enrolled. Ms Absolon pointed out that Focal already had approval to provide courses for overseas students and that it was not requesting any additional courses. She concluded the letter by saying:
We enclose the completed forms identifying the various locations and sizes of the premises on which we seek increases in student numbers. Copies of the relevant signed agreements for the use of the relevant premises can be sighted during the inspection of the relevant premises. An inspection of the premises should satisfy VETAB as to the physical resource capacity of the relevant sites. As we already have our courses approved for CRICOS as per section 34(3) of the VET Act 2005 we believe there is no justification on VETAB’s part for insisting that we resubmit all the documentation on the checklist supplied by VETAB.
29 Ms Absolon did not enclose with that application a set of Learning and Assessment Strategies for each qualification, copies of leases and/or agreements, policies and procedures, trainers matrix, timetables etc as had been requested. She told the Tribunal that she thought that VETAB had all the documentation it needed and she believed it was an unreasonable request. She said she co-operated by submitting a request in writing for site approval and by submitting the floor plans but not the other documents that had been requested. Nevertheless, Ms Absolon admitted that she could have provided the requested documents.
30 VETAB did not respond to Ms Absolon’s letter. We note that VETAB could have exercise its power under s 34(7)(a), to refuse the application for approval on the ground that “the applicant has not furnished such further information in relation to the application as the Board requires.” Instead VETAB did not determine the application. Nevertheless, Ms Absolon agreed that as of shortly after 30 March 2007, when she received Ms Willis’ letter, she was on notice that VETAB required her to provide the requested documentation. She also agreed that she did not submit all the information that Ms Willis had requested. In our view, Ms Absolon’s attitude to VETAB’s requests to apply for approval was unjustifiably combative.
31 As its registration and approval were due to expire, Focal submitted an application for renewal of registration and CRICOS re-approval on 1 April 2008. VETAB appointed Ms Sarah Dew to conduct a desk-based audit. The application did not seek an increase in approved student capacity. Ms Dew conducted the desk audit on 2 October 2008. As at that date PRISMS data identified that 2,098 students were enrolled. Ms Dew’s compliance audit report was sent to Focal on 4 November 2008. Ms Absolon’s failure to apply for the relevant approval is another example of her unco-operative attitude to VETAB’s legitimate requests.
32 Meanwhile, in May 2008, Ms Absolon says that Focal imposed its own moratorium on enrolling new students for commercial reasons. In Ms Absolon’s words, Focal decided to ‘take stock, from a commercial perspective, to make sure that premises were adequate and that there were sufficient qualified staff.’ She said that that decision had nothing to do with VETAB. This explanation highlights Ms Absolon’s lack of respect for VETAB as the regulating authority. Rather than concede that she was acting outside the scope of her approval to provide courses to overseas students, she chose to characterise the moratorium on student enrolments as a purely commercial decision, inferring that it was for her and her alone to determine the number of students that should be enrolled.
33 On 24 June 2008 a meeting was held at Focal’s Greenfield Parade site with representatives from the Commonwealth Department of Education, Employment and Workplace Relations. The purpose of the meeting was to discuss the fact that 2,200 overseas students were enrolled at that time, even though Focal only had approval for 350 students. Ms Absolon and Lisa White, Focal’s administration manager, attended that meeting. Ms Dew attended as an observer. It was put to Ms Dew that there were two issues discussed at the meeting; the current level of enrolments, and the fact that Focal had imposed its own moratorium on enrolling new students from May 2008. Ms Dew admitted that the issue of over enrolments had been discussed and agreed that over 2,000 students were enrolled at the time. Ms Dew cannot recall a conversation about a self-imposed moratorium but said that since the meeting she has read that Focal said it had imposed such a moratorium. We accept that Ms Dew cannot recall that conversation but find, in accordance with Ms Absolon’s recollection, that that matter was discussed.
34 On 19 September 2008, Dr Shaw, Director of the Education Services for Overseas Students (ESOS) Provider and Support and Compliance Unit wrote to Ms Absolon suggesting that because of the over-enrolment issue, Focal agree not to create any new enrolments in any of its courses for 3 months. Dr Shaw said that “Focal’s agreement to implement this option would help minimise the risk that overseas students could be adversely affected by any outstanding issues of compliance with Standard 14 of the National Code and/or with state legislation, to be determined by VETAB.” Focal did not agree to this suggestion. This failure is another example of Ms Absolon’s belief that it was acceptable for her not to comply with recommendations or requirements of the regulators, if she did not regard them as legitimate or in accordance with her interests.
35 On 4 November 2008 VETAB wrote to Ms Absolon advising that the audit report had been completed. The conclusion reached in that report was that certain matters including Focal’s breach of the student capacity limit and operating from unapproved sites, were serious enough to recommend immediate suspension as a provider of courses to overseas students. Ms Absolon responded to that letter on 2 December 2008 taking issue with many of VETAB's findings. In particular, Ms Absolon submitted that while VETAB has a discretion to approve a provider’s maximum capacity, it does not have the power to “unduly restrict an organisations training operations by limiting its enrolments". While conceding that VETAB has the discretion to approve a provider’s maximum capacity, Ms Absolon appears to be suggesting that VETAB does not have the power to limit enrolments if that is not in the interests of the organisation. This comment reflects Ms Absolon’s view that VETAB should not interfere with her operations.
36 On 7 September 2009 VETAB formally advised Ms Absolon that Focal’s registration had been cancelled. One reason for the cancellation was that Focal had 1,389 overseas students enrolled and studying at various sites despite only having approval for 350 students to be enrolled and studying at the Greenfield Parade site. Furthermore, despite being asked to do so, Focal had not submitted an application in proper form for an increase in those numbers.
37 Ms Absolon agreed that VETAB had authority to approve sites from which courses could be provided to overseas students and that by 24 July 2006 she had obtained that approval in relation to the premises at Greenfield Parade. When pressed, Ms Absolon agreed that VETAB had not granted approval in relation to any other sites. She said that VETAB had not approved Focal to provide courses to overseas students from any other sites because its officers had not taken up her invitation to assess those sites. Ms Absolon said that her responsibility was merely to notify VETAB of the fact that Focal was operating from other sites. It was then up to VETAB to assess those premises. Ms Absolon denied that VETAB had told her what the process was to be and that she had ignored it. However, we are satisfied that from the date of the mediation on 7 February 2007, Ms Absolon was aware that VETAB required her to apply for approval for sites at which Focal provided courses for overseas students and a student capacity in respect of those sites. We also find that Ms Absolon was aware as of at least 30 March 2007 that VETAB required her to provide a complete set of documentation in support of that application.
38 Ms Absolon declined to comply with Board’s requests and continued to operate from sites other than Greenfield Parade. It was not until nearly 3 years later, when Focal’s registration and approval had been cancelled, that Focal applied in proper form for approval of those sites and an increase in student capacity.
Meaning of “ethical standards”
39 There is no definition of “ethical standards” in the legislation and the ordinary meaning should be applied. The Macquarie Dictionary, 3rd edition, The Macquarie Library defines “ethical” to mean “adjective 1. relating to or dealing with morals or the principles of morality, relating to right and wrong in conduct 2. in accordance with the rules or standards for right conduct or practice, especially the standards of a profession.”
Board’s submissions
40 VETAB submitted that despite knowing exactly what she was required to do Ms Absolon chose to argue with VETAB about the scope of its powers and continue to operate from unapproved sites and breach the cap on student capacity. Mr Cribb considered that that conduct disclosed that Focal’s “ethical standards” are such that registration and/or approval are not warranted if it were applying for registration or approval now.
41 Mr Cribb put to Ms Absolon that if she was dissatisfied with VETAB’s 30 March 2007 letter she could have sought legal advice about that matter. Ms Absolon said that her understanding was that she could only apply to the Tribunal for a review of a decision made by VETAB. Another option, according to Mr Cribb, would have been to apply to the Supreme Court for a writ of mandamus if she considered that VETAB had failed to carry out its duty. Mr Cribb said that Ms Absolon had pursued legal remedies in the past but in this case she chose to ignore VETAB’s advice and continue to operate from unapproved sites.
42 It does not reflect adversely on Ms Absolon that she chose not to commence proceedings in the Supreme Court in relation to VETAB’s conduct. VETAB had the power when Focal submitted an incomplete application to refuse the application on the ground that Focal had “not furnished such further information in relation to the application as the Board requires”: VET Act, s 34(7). It was not incumbent on Focal to commence proceedings in the Supreme Court if it disagreed with the Board’s interpretation of its powers.
Ms Absolon’s submissions
43 Ms Absolon submitted that her conduct was not unethical because:
a) Focal had imposed its own moratorium on enrolments in May 2008 and student numbers were declining when VETAB decided to cancel its registration;
b) she has not acted dishonestly or in breach of any legal requirement;
c) there was no condition on Focal’s registration that it not enrol more than 350 students; and
d) VETAB knew about the conduct and did not intervene until 3 years later.
44 Self imposed moratorium. Focal imposed its own moratorium on enrolling any new students from May 2008 so that when the ‘no new business condition’ was imposed student numbers were falling. According to Mr Cleary, the fact VETAB knew about the moratorium makes it relevant. As we have said, Ms Absolon’s claim that the moratorium had nothing to do with VETAB, reflects her view that the level of student enrolments was her decision and not VETAB’s. That view is an example of the lack of respect Ms Absolon had for VETAB and its officers.
45 No dishonesty or breach of legal requirement. We agree that Ms Absolon’s conduct cannot be regarded as dishonest. She was not attempting to conceal information from VETAB or give VETAB a false impression of her operations. However, we disagree with the submission that she was not in breach of any legal requirement. Mr Cleary on behalf of Ms Absolon submitted that s 34(6) is not a requirement that Focal obtain approval for sites for the purpose of conducting courses. That provision is merely an example of conditions that might be imposed. According to Mr Cleary, there is nothing in the legislation that requires a training organisation to obtain approval to operate from particular sites. The approval relates to the provision of courses for overseas students: s 34(3) of VET Act. The effect of s 34 is that at the time of application for approval, or at any later time, VETAB may place conditions on the approval including, for example, a condition specifying the premises from which the courses are to be conducted. We accept Mr Cribb’s submission that the effect of the Terms of Settlement was that VETAB granted approval to Focal to provide courses for overseas students on condition that those course be conducted from the Greenfield Parade site: s 34(5) and (6). VETAB also decided to approve the maximum number of students Focal could enrol at 350. It has the power to do so pursuant to paragraph 12.1 of the National Code. We are satisfied that Focal was operating in breach of a condition on its CRICOS approval that it operate from the Greenfield Avenue site. We are also satisfied that it was in breach of the maximum number of students it was approved to enrol.
46 It follows that conducting the courses from premises other than the approved premises and/or enrolling more than 350 students is contrary to the terms of the approval that were granted. In order to remedy that situation, VETAB requested that Focal apply for approval to conduct the courses from the other premises and nominate the number of students it wished to have studying at those premises. We do not accept Focal’s submission that Focal was not acting in breach of any legal obligation in failing to make those applications.
47 Not a condition on registration. Mr Cleary sought to distinguish this case from the decision in Sydney Business Institute Pty Ltd v NSW Vocational Education and Training Accreditation Board [2009] NSWADT 322. In that case, the Tribunal affirmed the Board’s decision to cancel the applicant’s registration. One reason for the Tribunal’s decision was that it was a condition of the applicant’s registration that the maximum number of students being taught does not exceed 234: VET Act, s 13(2). The applicant was in breach of that condition. We acknowledge that in the present case, the student cap was not expressly imposed as a condition of registration. Nevertheless, Ms Absolon was on notice that she was required to apply and to obtain approval from VETAB before she could operate from sites other than Greenfield Parade or enrol more than 350 students.
Mr Cleary submitted that Ms Absolon’s conduct was not unethical because VETAB was aware of the conduct from at least March 2007 but did not address it until September 2009. Mr Cleary drew the Tribunal’s attention to a passage in Austech Institute for Further Education v Vocational Education and Training Accreditation Board [2009] NSWADT 323 and urged us to come to the same conclusion in this case. In that case the Tribunal concluded [at 44] that:
Austech should not have acted unilaterally to enrol more students than it was approved to enrol. It did so because it considered it to be in its own interests to do so and it did not anticipate any negative repercussions. That conduct may be regarded as self-serving but it is not unethical in circumstances where the Board was fully aware of the situation and did not take any action until imposing the no new business condition in December 2008.
49 VETAB was aware that Focal was operating from unapproved sites and had considerably more than 350 students enrolled, but did not make a decision in relation to that conduct until 17 August 2009. The fact that the Board did not address Focal’s failure to provide applications for approval in proper form for each of the sites from which it was operating is a relevant consideration. What VETAB could have done at that stage was to refuse the application on the ground that Focal had “not furnished such further information in relation to the application as the Board requires”: VET Act, s 34(7). Instead, VETAB did nothing until Focal re-applied for registration and approval. A decision to cancel approval partly on the basis of operating from unapproved sites and exceeding the student cap, was not made until September 2009, more than two years after the issue was squarely raised by the correspondence between the parties in March and April 2007.
Conclusion
50 The Tribunal stands in the shoes of VETAB. VETAB has power to cancel Focal’s registration and approval on the ground that its “ethical standards” are such that registration and/or approval are not warranted if it were applying for registration or approval now: VET Act, 18(2)(e) and s 34(7)(c).
51 The evidence satisfies us that Ms Absolon did not comply with VETAB’s legitimate requests to apply in proper form for additional sites and an increase in student capacity. Even when told in 2007 that her application was incomplete and, later, that an application form with supporting documentation needed to be provided for each additional site, Ms Absolon did not comply. Rather, she was suspicious of VETAB’s motives and responded in a combative manner. As the sole director and chief executive officer of Focal, Ms Absolon’s ethical standards are below that which VETAB and the general public is entitled to expect of her. However, that diminution in ethical standards does not warrant the cancellation decisions. That is the case for several reasons. Firstly, the degree of moral culpability is not as great as it would have been had Ms Absolon been dishonest. Secondly, while Ms Absolon was fully aware that she was only approved to provide courses to 350 overseas students, that was not an express condition of her registration. Finally, Ms Absolon’s culpability diminished when VETAB took no action after receiving her April 2007 letter.
52 In all the circumstances, Ms Absolon’s ethical standards do not warrant cancellation of Focal’s registration or cancellation of Focal’s approval to provide courses to overseas students. Nevertheless, Ms Absolon is on notice that if her unco-operative, disrespectful and, at times, combative attitude continues, adverse decisions may be warranted.
53 The first four decisions are not the correct and preferable decisions because Focal’s “ethical standards” are not such that registration and/or approval would not be warranted if it were applying for registration or approval now. Each of the first four decisions and, as a consequence, the fifth decision should be set aside.
54 It is appropriate to substitute for the decision to refuse Focal’s application for renewal as a registered training organisation, a decision to renew that registration. We do so without imposing any conditions on the registration but note that VETAB is at liberty to impose any conditions on the registration as it thinks appropriate at any time:We do so without imposing any conditions on the registration but not that VETAB is at liberty to impose any conditions on the registration as it thinks appropriate at any time: VET Act, s 13(2).
55 A decision in substitution for the decision to refuse Focal’s application for renewal of approval to provide courses to overseas students needs to be made. We understand that it would not be in dispute, given the Tribunal’s findings, that approval should be granted in relation to the already approved courses. Given the history of this matter, a condition should be imposed on the approval specifying that the courses are to be conducted from the Greenfield Parade, Bankstown premises. In addition, the maximum number of students that Focal can enrol should be capped at 350. VETAB should consider on the basis of Focal’s 10 January 2010 application and any further relevant material that has been provided, whether that condition should be amended to extend to other premises and whether the maximum number of students should be increased. Given the delay that has already occurred, we recommend that that decision be made as quickly as practicable.
1. The respondent’s decision to cancel the applicant’s registration as a training organisation is set aside.
2. The respondent’s decision to refuse the applicant’s application for renewal of registration as a training organisation is set aside. In substitution for that decision a decision is made to register the applicant as a training organisation.
3. The respondent’s decision to cancel the applicant’s approval to provide courses to overseas students is set aside.
4. The respondent’s decision to refuse the applicant’s application for renewal of approval to provide courses to overseas students is set aside. In substitution for that decision a decision is made to approve the applicant to provide the courses to overseas students for which it had approval prior to the decisions under review being made. The approval is made on condition that the courses be conducted from the Greenfield Parade, Bankstown premises occupied by the applicant. In addition, the maximum number of students that can be enrolled and studying at those premises is 350.
5. The respondent’s decision to impose a condition on the applicant to prevent it from recruiting or enrolling any new students is set aside.
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