Forever Family Day Care Pty Ltd and Secretary, Department of Education

Forever Family Day Care Pty Ltd and Secretary, Department of Education [2022] AATA 2755 (24 August 2022)
Division:GENERAL DIVISION
File Number(s): 2017/3911, 2017/3912 & 2019/5632
Re:Forever Family Day Care Pty Ltd

APPLICANT

AndSecretary, Department of Education
RESPONDENT

DECISION
Tribunal:Deputy President B W Rayment OAM QC
Date:24 August 2022
Place:Sydney

The first reviewable decisions, dealing with the suspension and cancellation are affirmed. The second reviewable decision refusing to grant renewed approval under the new Administration Act is remitted to the respondent, with a direction that the applicant satisfies the proper person requirements of s.194E of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).
...............................[SGD].........................................
Deputy President B W Rayment OAM QC
CATCHWORDS
CHILDCARE – Family assistance law – child care benefit – cancellation of approval as an approved child care service – breach of conditions of provider approval – overseas educators – children overseas – exceeding educator to child ratios – decisions affirmed - decision set aside and remitted.
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
A New Tax System (Family Assistance) Act 1999 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 (Cth)
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Cth)
Child Care Benefit (Session of Care) Determination 2000 (Cth)
Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017(Cth)
Education and Care Services National Regulations
REASONS FOR DECISION
Deputy President B W Rayment OAM QC
24 August 2022

This review concerns decisions made by the Secretary to suspend (from 28 September 2016) under the family assistance law and later (from 15 February 2017) to cancel the approval of the applicant for child care benefit. Those decisions were internally reviewed concurrently in June 2017 and affirmed. The suspension decision and the cancellation decision each had the effect that the applicant’s service would no longer be eligible for child care benefit for child care. The business of the applicant with child care benefit thus lasted about three years. Since then, it has continued with regulation under the NSW authorities with very reduced staff and children in care.
Since the hearing in this matter the State authorities decided to cancel the State registration, and the applicant took the matter to the New South Wales Civil and Administrative Tribunal (NCAT), which recently affirmed the cancellation decision.
Prior to the suspension of the applicant under the family assistance law, a compliance review was conducted in relation to the applicant and on 9 September 2015 the applicant was served by the Secretary with a notice of intention to impose sanction, and a notice that the Department was considering suspending the approval of the applicant’s service under s.200(1)(d) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the old Administration Act) on 16 June 2016.
The applicant’s sole director at all times has been Ms Fatuma Omar. Previously as a sole trader, she carried on the same business under the same business name, Forever Family Day Care, from 11 July 2011 to 30 June 2013, and from 1 July 2013, the applicant company carried on the business. Her husband, Hamza Mohamud acted as general manager of the applicant from 1 July 2013 and also had that role from December 2012 in the time when his wife was a sole trader, that is, up to 30 June 2013. The formal approval of the applicant under s.195 of the old Administration took effect from 2 December 2013.
The principal disputed allegations made by the regulator against the applicant fall into a number of categories:
(a)Cases where the applicant informed the respondent that existing educators were continuing to provide child care when in fact those educators were overseas (the educator overseas allegations);
(b)Cases where the applicant informed the respondent that children received care, during periods when those children were overseas (the children overseas allegations); and
(c)Cases where educators contracted by the applicant were said to exceed the maximum numbers permissible under the family assistance law (the excess of ratio allegations).
In some cases falling within the educator overseas category, and without the knowledge of the respondent, care was in fact provided by relief educators, and the applicant says that in each case they conducted necessary checks into the qualifications of the relief educators, although it is common ground that the respondent was unaware of those matters, and that the procedure adopted by the applicant of failing to notify that relief educators were providing care involved a contravention by the applicant of the applicable rules. That case of the applicant also involved the assertion by the applicant that its departure from the rules involved no financial impropriety, which, if correct, went to the quality of the applicant’s breach.
No such case was made by the applicant concerning the children overseas allegations made against the applicant and in these cases the applicant said that it was unaware of the true situation, and that its erroneous reports to the respondent were a result of false reports made to it by the educators which generally led to the educators in question being terminated upon the false reports coming to attention.
The excess of ratio allegations were the subject of detailed factual and legal justifications put forward by the applicant, which will be discussed below.
A preliminary issue arose between the parties at the outset of the hearing, which commenced in August 2020. I indicated that I would give reasons for my decision to resolve that issue in favour of the applicant in these reasons, and I now proceed to do so.
The preliminary issue.
It should be explained that prior to action being taken against the applicant, it had a large administrative staff and group of educators and provided care to a large number of children. It employed 27 administrative staff members. Amongst the duties of 14 co-ordinators was to regularly (approximately monthly) inspect the premises of educators and prepare inspection reports. Fortnightly timesheets were provided by educators of children in care, and the timesheets provided for parents of children in care to countersign. The timesheets were used for various purposes after they had been checked, including payroll, and reporting to the respondent.
At the height of the applicant’s business operations care was provided to more than 1400 children from more than 800 families. Some 187 educators were contracted by the applicant. The applicant had dealings with the hundreds of parents who had children in care through some 15 administrative staff which it employed.
Notice was given to the applicant of allegations made against it in 2016 and 2017, at a time when the applicant still employed its large staff. That staff had access to premises in Granville where the applicant’s business records were kept. That staff assisted Mr Mohamud and Ms Omar to respond to the respondent’s allegations at that time. For the purpose of the preliminary issue, and also generally to explain the background to the review in relation to the suspension and cancellation decisions, it is necessary to recount the earlier dealings between the parties to the review, in order to understand the context in which the preliminary issue arises.
On 16 June 2016 the respondent gave to the applicant notice (T4) that the respondent was considering suspending the approval of the applicant under the family assistance law, it invited the applicant to make submissions as to why that decision should not be taken, giving the applicant 28 days to respond.
The notice gave particulars (extending over more than 280 pages).
On 14 July 2016 the solicitors for the applicant wrote to the respondent (T5) setting out its response to the case made against it. As to the “educator overseas” allegations, the applicant dealt with allegations going back to 26 April 2014 until 6 June 2016, asserting that in most of those cases, the educators in question had notified the applicant of their intention to be overseas, and that in those cases, a relief educator was retained to care for the children during the absence of the primary educator. The letter stated that the applicant “believed this to be the correct procedure” in the case of an educator being overseas and the retainer of a relief educator, that is, reporting the care as being given by the “primary educator” rather than the relief educator during the relevant periods.
The applicant after investigation accepted most of the allegations relating to the “children overseas” and indicated that the educators had misinformed the applicant as a result of which it was in the process of terminating the educators in question, save for one educator whose actions were said to be inadvertent. In one other case the applicant erroneously reported that the child was present, when the educator’s report was to the contrary.
The applicant asserted that in the majority of cases the “excess of ratio” allegations were incorrect and gave some reasons for that assertion, also asserting that it and its educators were conscious of the relevant requirements throughout the relevant period.
The applicant also conducted investigations and responded to a number of other claims made by the respondent.
The main point for present purposes is that the applicant had a large staff in a position to assist Mr Mohamud and Ms Omar to respond quickly to the respondent’s claimed contraventions. The applicant also notified the respondent of remediation steps it proposed to take and sought to defend its governance procedures.
The materials included with the solicitors’ letter were voluminous.
The respondent made its decision to suspend the applicant, in September 2016. At the time of the subsequent cancellation in February 2017, the number of children to whom the applicant provided care and the number of educators still at work had substantially reduced.
At the present time the applicant employs no administrative staff, and no coordinators and Ms Omar and Mr Mohamud conduct a very small operation without the benefit of Commonwealth payments, and under the New South Wales authorities.
On 15 August 2016 the respondent served a notice on the applicant under s.158 of the old Administration Act requiring the production of documents by 30 August 2016, and a further notice under s.57G for the provision of information to the respondent by the same date.
In the 27 September 2016 letter advising the applicant of the suspension decision (T7), the respondent advised the applicant that it was considering cancelling the approval of the applicant and invited any further submissions from the applicant within 28 days. At various paragraphs of the letter of 27 September, reference was made to reports on which the respondent relied to decide to suspend, said to relate to additional contraventions alleged by the respondent, and on 4 October the applicant’s solicitors requested copies of those reports. The respondent provided the reports, extending to about 50 pages.
On 25 October 2016 the applicant’s solicitors responded to the new reports and made further submissions in opposition to the proposal to cancel the applicant’s approval for child care benefit. That document (T10) with annexures extended to more than 390 pages. It indicates that further work to respond to the respondent’s concerns was then done by the applicant, no doubt with the assistance of its then remaining staff.
The applicant submitted a request for internal review of the suspension decision, and from time to time, sought advice as to when it would be determined.
On 14 February 2017 the respondent decided to cancel the approval of the applicant under the family assistance law and sent to the applicant reasons for its decision (T19).
On 3 March 2017 the applicant sought internal review of the cancellation decision and asked for both the suspension decision and the cancellation decision to be reviewed concurrently and made further and updated submissions on both matters, responding also to the reasons for the cancellation decision. That document and its attachments was also supported by additional evidentiary materials.
The internal review officer invited additional submissions on particular matters on 30 March 2017 asking for a response by 28 April 2017. A visit took place by four compliance officers to the applicant’s premises on 10 April 2017 for purposes connected with the internal review. Ms Omar, Mr Mohamud and three staff members assisted with compiling various required records.
On 27 April 2017 the applicant’s solicitors wrote to the authorised review officer making submissions for the internal review and confirming their instructions about certain documents of which copies were attached. Further correspondence then ensued.
On 21 June 2017 the authorised review officer affirmed the decisions which were internally reviewed (T31), albeit with some particular revisions to the findings earlier made, leading to the rejection of some matters referred to in the original decisions to suspend and later to cancel.
The matter then proceeded to this Tribunal. The applicant applied for review in respect of the 21 June 2017 decisions on 30 June 2017. On 30 August 2017 the respondent filed its Statement of Facts Issues and Contentions (SFIC). The applicant’s Statement of Facts Issues and Contentions is dated 5 September 2017. As the respondent’s SFIC makes clear the respondent put the case solely on the basis of the documents referred to in the s 37 statement and the T documents.
On 12 April 2018 the respondent filed a supplementary SFIC drawing the Tribunal’s attention to amendments made to the Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 (Cth) (the Breach Determination) which became law on 4 April 2018, providing new criteria for situations in which “the appropriate sanction is cancellation”, and having effect upon the review by the Tribunal of the decisions made on 21 June 2017. The respondent submits that the discretion of the Tribunal to do other than affirm the cancellation decision is significantly affected by the amendments made to the Breach Determination, when one has regard to findings which the respondent submits ought to be made in relation to contraventions by the applicant. The respondent’s supplementary SFIC also joined issue with a number of assertions made by the applicant in its SFIC dated 5 September 2017.
In 2018 discussion took place between the present parties and the Tribunal about the amendments made to the Breach Determination and as to their legality. Subsequently the amendments were repealed and the respondent does not rely upon the allegations made in the supplementary SFIC.
The fresh application by the applicant
On 6 September 2018 and by a revised application for approval, the applicant made a fresh application for approval of its service under s.194B of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), being a new Act of the same name as the old Administration Act (the new Administration Act). On 15 August 2019 an internal review decision was made refusing the application on various grounds including that the applicant, Ms Omar and Mr Mohamud were not fit and proper persons to be approved under that Act. Copious references were made in the reviewable decision to findings that had been made by the respondent in the proceedings under the old Administration Act, and which are in issue in the 2017 review. The applicant applied to the Tribunal for review of that decision on 9 September 2019 and that review has been heard together with the 2017 review.
Importantly for the preliminary issue, although the then up-to-date concerns of the respondent were dealt with in the reviewable decision, the fresh allegations of contraventions of the old Administration Act first made by the respondent in May 2020 had not yet been made by the respondent.
The fresh allegations
These proceedings were listed to commence in August 2020, and in May 2020 the respondent filed its current SFIC. By that SFIC the respondent expanded its contravention allegations quite substantially. The preliminary issue was formulated by the applicant in its SFIC dated 15 June 2020. In support of its application, which was treated as an application to the Tribunal to limit issues under s.25 of the Administrative Tribunal Act 1975 (Cth) (the AAT Act), or in the alternative, as a matter for directions under s.33 of the AAT Act, the applicant led evidence from Mr Mohamud. It seems to me that s.25 rather than s.33 is the appropriate way to resolve the preliminary issue.
The respondent’s obligations under the old Administration Act required the Secretary to set out the grounds for suspension or cancellation and to summarise the evidence and other material on which those grounds were based: see s.201(1) of the old Administration Act. Those obligations were necessarily required to be carried out while the applicant was still trading, that is, before any sanction was applied. The recipient of the notice could, in an appropriate case, direct its servants to assist in responding to the notice. It was required to keep any records for three years, and that obligation had expired or largely expired in May 2020. Late allegations had the potential to disadvantage the applicant.
The applicant no longer stores old records at its Guildford premises and now stores them in no particular order in private garages. It no longer employs administrative staff to assist with the work involved. Except to a small extent, it was unable to assemble its case to investigate and answer the fresh allegations.
To some extent the steps taken by Mr Mohamud to attempt to respond to the fresh allegations was criticised by the respondent. It was not unreasonable for Mr Mohamud to seek to respond to the fresh allegations as he formerly responded to the allegations some years ago. Indeed it seems that responses made by the applicant were met with some success, and indeed led the internal reviewer to rule out a number of allegations previously made by the respondent.
The applicant was placed in a very difficult position by reason of the late notice of the fresh allegations. Not only did it no longer have administrative staff able to assist it, its records were out of order and in different places. Mr Mohamud had other employment and was available to search for relevant records only out of working hours and found himself able to investigate only a small number of the fresh allegations. I have decided that the issues should be limited so as to exclude them, save as mentioned below. The main reason for that decision is that the applicant would be significantly prejudiced unless the issues were limited as I have indicated. The respondent founded its decisions to suspend and cancel on the allegations pressed some years ago, and the respondent ought not to be prejudiced unduly by being limited to the original allegations and those the applicant has in fact been able to respond to.
Those (relatively few) new allegations that the applicant was able to assemble its own case in order to attempt to answer those allegations will remain in the case to be dealt with on this review. On the other hand, certain pressed allegations, as submitted by the applicant, fall into the same category as those rejected on account of the preliminary issue. An example is the point made by the respondent about 155 sessions of care said by the respondent to be available to it under the rubric of the children overseas allegations, because of a mistake made by Mr Mohamud in his early evidence when he mistakenly said that those sessions had been investigated. Those allegations are unavailable to the respondent, because they are fresh allegations now unable to be investigated by the applicant.
The 2017 review, both as to suspension and as to cancellation
The old Administration Act

The Act as it stood prior to its amendment on 2 July 2018 affects the obligations of the applicant at that time. The original decisions to suspend and later to cancel the applicant’s registration and the internal review decision which affirmed both decisions, and all the alleged misconduct of the applicant, were all made or occurred while the old Administration Act was in force.
For the purpose of these proceedings the old Act is continued in force by Item 10 of Schedule 4 to the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth). The terms of item 10 are set out below at [49].
The particular contraventions alleged against the applicant, apart from those dealt with in the preliminary issue above, are as follows:
(a) Cases where the applicant claimed that sessions of care were provided by named educators, when those educators were actually overseas. That allegation relates to s.196(1) and (2) of the old Administration Act. The applicant does not dispute that the care was not provided by the named educators in all cases, but says that care was provided by so-called “relief educators” in many of the cases in question;
(b) Cases where the applicant claimed that sessions of care were provided to named children at a time when the children were overseas. The allegations relate to s.219N of the old Administration Act. The applicant disputes some of those allegations;
(c) Cases where the respondent alleges that the educator to child ratio was exceeded by the applicant, all of which allegations are denied by the applicant. The allegations relate to s.196(1)(2) and (3) of the old Administration Act; and to paragraph 10(1A) of the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Cth) (the Eligibility Determination);
(d) The respondent alleges and the applicant does not dispute that in breach of s.196(2) of the old Administration Act on 328 occasions the applicant reported absences in respect of children whose care had not commenced;
(e) The respondent alleges and the applicant does not dispute that in breach of s.192(2) of the old Administration Act on some 84 occasions the applicant reported absences of children whose care had terminated;
(f) The respondent alleges and the respondent admits that in breach of s.196(2) of the old Administration Act on 22 occasions the applicant reported sessions of care which overlapped with sessions of care reported by other services;
(g) The respondent alleges and the applicant admits that on 225 occasions the applicant wrongly reported before school care until 9 am for children whose school commenced before 9 am;
(h) The respondent alleges and the applicant admits that in breach of s.196(2) of the old Administration Act (and s.219AB of the Act) on 195 occasions the applicant reported sessions of care outside the timeframes mentioned in s.219AB.
Section 200(1) of the old Administration Act provided as follows:
(1) If the Secretary is satisfied that an approved child care service has not complied, or is not complying, with a condition for the continued approval of the service, the Secretary may do one or more of the following:
(a) vary the conditions for the continued approval of the service imposed under subsection 199(2);
(b) impose additional conditions for the continued approval of the service under subsection 199(2);
(c) reduce the number of any child care places allocated to the service under section 207;
(d) suspend the service’s approval;
(e) cancel the service's approval;
(f) withhold the payment of enrolment advances to the service under section 219RA;
(g) require the remittal to the Secretary of enrolment advances paid to the service under section 219RA;
(h) suspend, for a maximum of 3 weeks, payment under section 219Q or subsection 219QA(2) in respect of fee reduction;
(i) suspend, for a maximum of 3 weeks, payment under section 219QC or subsection 219QD(2) in respect of child care rebate.
The new Breach Determination
Under s.200(5) of the old Administration Act it was provided that the Minister may by legislative instrument determine the factors to be taken into account by the Secretary in applying section 200(1) of that Act to an approved child care service (that is, determining whether sanctions may be imposed, whether they are appropriate and if so which sanction is to be imposed).
On 4 April 2018, the Breach Determination came into effect. On 2 July 2018 the Breach Determination ceased to have effect. However the Breach Determination was saved by item 10 of Schedule 4 to the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth) for the purpose of the Tribunal’s review of the first reviewable decision.
Item 10(1) was in the following terms:
10 Saving of law in relation to approved providers
(1) The following Acts and instruments continue in force, on and after the commencement day, subject to any modifications prescribed by rules made under item 12 (together these are the continued law), in relation to things done, or matters arising, before the commencement day in relation to a person mentioned in subitem 9(1):
(a) the Assistance Act, as in force immediately before the commencement day;
(b) the Administration Act, as in force immediately before the commencement day;
(c) an instrument (whether legislative or administrative) in force for the purposes of the Assistance Act or the Administration Act immediately before the commencement day;
(d) any other Act amended by this Act, as in force immediately before the commencement day.
The commencement day was defined by Item 1 of Schedule 4 as 2 July 2018.
Item 9(1) was in the following terms:
(1) If, immediately before the commencement day, a person is the operator of an approved child care service within the meaning of the Administration Act as then in force, then, on and after the commencement day:
(a) the person is taken to be:
(i) an approved provider within the meaning of the Administration Act; and
(ii) approved in respect of the service; and
(b) the service is taken to be a service of a type determined by the Secretary under subitem (2).
It is accordingly necessary to consider the terms of the Breach Determination. Clause 4 of that instrument provided that:
4 Factors relevant to sanction decisions
In applying subsection 200(1) of the Family Assistance Administration Act to an approved child care service, the Secretary must take into account:
(a) the severity of the failure by the service to comply with the conditions for continued approval of the service; and
(b) the frequency of any previous failures by the service to comply with the conditions for continued approval of the service; and
(c) whether the failure by the service to comply with the conditions for continued approval of the service may threaten the health or welfare of any child in the care of the service.
Those matters are accordingly mandatory considerations in applying the sanctions provision.
Educator overseas allegations
It will be convenient to take the alleged contraventions in the order mentioned in [5] above, starting with the educator overseas cases. The practice of the applicant, where it became aware that an educator was going overseas was that it would, without notifying the respondent that a relief educator would be employed, continue to notify the respondent that the (then overseas) educator was continuing to provide care, and would pay the educator out of funds provided by the respondent, and expect that the (then overseas) educator would pay the relief educator for his or her services. The parents would, I gathered, generally know the identity of the relief educator and that he or she was actually providing care. That fact was verified to the respondent after it communicated with parents. The timesheets provided to the applicant would show the name of the relief educator and would be signed by the parents. Generally, the applicant did not, prior to its receipt of the notice of intention to cancel, notify the respondent of the names of the relief educators in question, although its case was that it had done all necessary checks into the qualifications of the relief educators before they provided care. It produced documents which tended to confirm that fact.
The applicant did not discuss its proposed course of action with the respondent, although it did raise other matters of doubt with the respondent from time to time. It seems to me that the applicant ought to have known that its procedure was irregular and risked a finding of contravention, because the reports made to the respondent were incorrect. The applicant suggested that it followed a procedure adopted by other industry members. Even if the applicant’s statement that others in the industry were behaving similarly is correct, the procedure still involved the risk of findings of contravention, because the reports made by the applicant were clearly inaccurate. Not to have made the respondent aware of the names of the relief educators at the time they were engaged is also serious in my opinion. The respondent was thereby misled as to the identity of those actually providing care and did not have details of their qualifications at that time.
In the period of time after the applicant knew of a proposed cancellation from a notice served by the respondent it provided details as to the qualifications of the relief educators, and their engagement, thus attempting to repair its breaches. It was not perhaps squarely suggested to the applicant that it back-dated the documents which it produced evidencing the checks it did into the relief educators, and the evidence does not support the making of such a finding. Nevertheless the applicant failed to inform the respondent of the existence, names or qualifications of the relief educators until the matter was drawn to attention by the respondent’s notice of intention to suspend.
The motive nominated by the applicant for its contraventions was, in effect, to make the steps necessary to satisfy the respondent easier to manage. That motive is not meritorious or such as to make the contraventions less serious. The instances of use of the applicant’s practice are very numerous, relating to 4926 sessions of care over the period when the applicant was a registered provider. Each time the applicant said that the care was provided by the (overseas) educator, it made a false statement to the respondent, and did so knowingly.
There are also additional admitted cases where the “relief educator” defence was not raised by the applicant, relating to 102 sessions of care, bringing the total number of alleged contraventions to 5028.
The applicant says that for the future, if it regains its registration, it will cease to use the practice which it accepts as irregular and as a contravention of the old Administration Act. The applicant’s evidence that the practices of the applicant as to relief educators were also followed by some other child care providers, if correct, suggests that the respondent may have learned of such a practice. I received evidence given by Ms Mathers that the department did make providers aware that whoever did physically look after the child needs to be the person who was entered into the system, which from the department’s point of view confirms that the necessary checks have been done. There was no evidence from the respondent as to what it was that led the respondent to make providers aware that the names of physical educators must be disclosed. Use could have been made by the respondent of this evidence in the cross-examination of the applicant’s witnesses. So far as I can see no such use was made of Ms Mathers’ evidence by the respondent. Nor did the applicant lead evidence that it was unaware of any such communication from the respondent.
The applicant has submitted that some of the respondent’s allegations about the seriousness of the educator overseas category of cases are, upon analysis, unproven. One example is that the applicant says that the respondent has not taken account of the results of its own survey of parents concerning their knowledge of the engagement of relief educators at relevant times, which tends to confirm the case made by the applicant that care was in fact provided during periods when educators were overseas. That submission of the applicant has substance, but nevertheless I have made a number of findings above which are critical of the processes followed by the applicant at the relevant time.
Finally, I reject the respondent’s submission that the health or safety of any children in care was in fact adversely affected by the use of the relief educators. It is true that the respondent was not furnished with true information about the identity or qualifications of the relief educators, and that such a procedure might have enabled unknown persons to be placed in charge of the children in question. But I cannot be satisfied that any educator was in fact unqualified, or that the health or safety of any child was endangered.
The circumstance that the applicant did not profit financially from its contraventions in the educator overseas category should be taken into account in its favour when considering this allegation.
A matter raised in cross-examination
A matter of some potential seriousness was raised in cross-examination of Ms Omar and Mr Mohamud relating to the excess of ratio allegations. It should be explained that the educator A---O--- was shown in the notice of intention to suspend as having provided care to eight rather than seven children from 2 May 2015 to 28 April 2016.
Ms Omar said at Tr 222 that A--- O--- educated three sets of twins and two other children from the same family, and the applicant gave her a written authorisation to care for all eight children, which was a recognised exception to the approved ratio of seven children to one educator.
There was a visit by the respondent to the applicant in 2017 in which Mr Lecce of the respondent asked for a copy of the written authorisation given by the applicant to the educator. At T24 a note of the meeting records the request, and Ms Omar saying that there may be something in writing, possibly in the form of an email, but she would need to conduct a search and possibly provide something to the Department later. The note also records Ms Omar saying that she knew of the family and their eight children.
Ms Omar was then asked whether the document in question was provided by means of an attachment to Mr Mohamud’s affidavit of 15 June 2020. At paragraph 86 of that affidavit, Mr Mohamud said:
86. In response to these allegations, FFDC:
(a) notes that a vast majority of the allegations were made in circumstances where more than 7 children were booked to receive care, but there were not more than 7 children physically in care at the time same;
(b) notes that several of the allegations relate to attendances being recorded due to an administrative error and that its CCMS records have been amended; and
(c) notes that 1,396 allegations relate to educator A--- O--- providing care to 8 children, all of whom were siblings. Regulation 124(6)(a) of the National Regulations allowed for care to be provided to more than 7 children if exceptional circumstances applied. One of those circumstances was if all the children were siblings in the same family, and the service had approved the educator, in writing, for the educator to provide care to those children. On 27 April 2015, FFDC wrote to A--- O--- providing that approval. A copy of FFDC’s letter dated 27 April 2015 is exhibited to this affidavit and marked HM-1 a page 1. I believe that FFDC accurately reported the 1,396 sessions for A--- O---.
Page 1 of HM-1 is a copy of an email in the following terms:
27^th April 2015
Dear A--- O---,
We write you this letter to advise that as of, 2^nd May 2015, you have been approved to exceed the educator to child ratio to care for the M--- siblings.
The approval is limited to education and care provided to the children of P--- M---- only.
Regards
Forever Family Day Care
The letter, dated 27 April 2015, provided approval for care to be provided from 2 May 2015, the date mentioned in paragraph 63 above.
As the cross-examination continued, it was put to Ms Omar that a supplementary affidavit of Ms Omar showed that contrary to the allegation made in the notice of intention to suspend, the education by A-- O-- began on 9 February 2015, rather than 2 May 2015, so that if there were an approval in existence at the relevant time, it should have come into existence in February 2015, not April.
Mr Mohamud ‘s affidavit of 3 August 2020 sought to explain the discrepancy in the documentation in paragraph 6 as follows:
In response to paragraph 62 of the Respondent’s Further SFIC, and paragraph 23 of the Further Mathers Affidavit, I say:
(a) I have reviewed the archived Harmony records maintained by the Applicant in respect of educator A--- O--- and the 8 siblings in her care;
(b) as a result of my review of the archived Harmony records, I observed that on 2 February 2015, the Applicant enrolled 8 siblings to be cared for by educator A--- O---. The enrolment was created in the name of their parent, P--- M---. A copy of a screenshot I have taken from the Harmony system recording the enrolment is annexed hereto and marked “A”;
(c) It was the general practice of the Applicant that it would create an enrolment record in Harmony soon after receiving completed hard-copy enrolment forms. For this reason, I believe that the Applicant would have received hard copy enrolment forms for each of the 8 siblings in or around late January 2015, or otherwise a short time prior to the enrolments being created in Harmony on 2 February 2015, and that it was the receipt of those hard copy enrolment forms that caused the Applicant to create the enrolments in Harmony
(d) from 9 February 2015, Ms O--- commenced providing care to the 8 siblings;
(e) Harmony records that on 2 May 2015, those 8 children were re-enrolled into the Applicant’s care in the name of another parent, P--- M---. A copy of a screenshot I have taken from the Harmony system recording the re-enrolment is annexed hereto and marked “B”;
(f) It was the general practice of the Applicant that it would create an enrolment record in Harmony soon after receiving completed hard-copy enrolment forms. For this reason, I believe that the Applicant would have received hard copy enrolment forms for each of the 8 siblings a short time prior to the enrolments being created in Harmony on 2 May 2015, and that it was the receipt of those hard copy enrolment forms that caused the Applicant to create the enrolments in Harmony;
(g) I believe that when the Applicant received the further enrolment forms for the 8 siblings, the person administering the enrolments would have identified that there were 8 siblings being cared for by one educator. I believe this then triggered the issuing of the letter produced by the Applicant dated 27 April 2015 granting written approval for the educator to provide care to 8 siblings;
(h) I understand the Respondent contends that the Tribunal should not accept that this letter was sent on 27 April 2015 and submits that the letter was created by the Applicant after the breach was identified and notified to the Applicant. I deny this contention and maintain that the letter date 27 April 2015 is a genuine letter which would have been issued to the educator on the date it was created, being 27 April 2015;
(i) the Applicant issued the 27 April 2015 letter because it was aware of the obligation to not exceed the educator to child ratio, and the relevant exceptions to that requirement (such as the sibling exception applicable in this case);
(j) I believe that, following receipt of the initial enrolment forms for th e8 siblings in or around late January 2015, the Applicant would have provided written approval to the educator permitting her to provide care to the 8 siblings. I do not have a copy of any such written approval and would not know where to begin looking for it in amongst the extensive archived records retained by the Applicant.

By way of surrebutter, Ms Mathers next pointed out that the second enrolment of the eight children occurred on 2 May 2016, not 2 May 2015. When that was drawn to her attention Ms Omar suggested at Tr 227-228 that when her staff member Amaya created the 27 April document she must have used the letter from the previous year (which cannot now be located) and erroneously failed to change the year to 2016.
Ms Liang concluded the cross-examination on that matter by suggesting that Ms Omar and her husband had provided falsified documents to the Tribunal. If that were so, it would indicate dishonesty.
Having closed their office following the suspension and cancellation, and now having lost access to many of their records, I cannot draw adverse inferences from the applicant’s failure to locate any 2015 letter. One often sees letters wrongly dated, including as to year, particularly at the beginning of a year. If a precedent letter from 2015 were used in 2016, without correcting the relevant year, that is not something that should be rejected out of hand, particularly if doing so might lead to serious findings of dishonesty. Nor can it be said that the failure of the applicant to call the staff member Amaya makes a dishonesty finding easier to infer. After all, she may not remember when she typed the letter.
The same issue was taken up by Ms Liang with Mr Mohamud. At Tr 391, he advanced the same explanation as Ms Omar, about the likely failure of the typist to enter the correct year. I am not satisfied that any alteration by either Ms Omar or Mr Mohamud occurred to the letter purporting to be dated in April 2015.
The 537 sessions of care in respect of which the applicant admits that incorrect reports were made by the applicant of care provided are blamed by the applicant upon false reports made to the applicant by educators. The statute makes the applicant responsible for the consequences of such false reports, and effectively makes the applicant strictly liable for the contraventions. No doubt the reason for such strict liability is to seek to ensure that approved providers will put into place good supervision of its educators. On the other hand, the quality of such a breach is not to be determined in the light of strict liability provisions. If with the best will in the world, the contravention is not discovered by the provider before inaccurate reports are made by it to the respondent, that is obviously less serious than the case of a provider who supervises carelessly, thus enabling a situation in which the provider and as a result the educator receives funds to which they are not entitled. The applicant points to the fact that it immediately terminated dishonest educators, and that is a relevant factor.
To some extent the respondent cross-examined the applicant’s witnesses to suggest that its supervision of the educators was deficient. The respondent led no evidence of experts as to the steps which were not taken which should have been taken.
The applicant had a system of coordinators attending at homes where care was provided on a monthly basis and at other times. 537 sessions of care represents a fraction of less than one thousandth of the total reported sessions of care, which numbered 570,752 sessions, as the applicant pointed out in submissions.
A related point is that the applicant was to some extent a victim of its own success in that it had a very large number of educators and children in care, which may have made the steps taken by dishonest educators easier to be kept hidden. The question of business size was not the subject of any evidence led by the respondent. I was not provided with any expert evidence about that matter. It is the kind of matter that could be relevant to each of the three reviewable decisions with which the Tribunal is concerned. If it was the size of the business of the applicant which made it difficult to discover that some of its educators were dishonest, consideration could have been given by the respondent to limiting the number of educators that the applicant could engage with its existing administrative staff, and that sanction was one of those available to the respondent.
Generally as to the admitted contraventions of 537 sessions of care, I am not provided by the parties with any evidence which might enable me to put a failure by the applicant to pick up dishonest conduct by educators into the context of other care providers. Nor was I provided with any evidence from the applicant to the effect that its processes had alerted it to dishonesty by educators before the contraventions were discovered by the respondent and notified by it to the applicant in the notice of intention to suspend. That is, I was not told that the applicant’s processes had led it to discover dishonesty among educators in filling out timesheets.
There may or may not have been other dishonest educators, and the practice of having timesheets and regular inspections by coordinators is not on its face insufficient as such.
Children overseas allegations
The respondent’s case is that it established using records of the immigration authorities that in relation to 419 sessions of care reported by the applicant, the children in question were not in Australia and that therefore the applicant’s reports were incorrect. That allegation is not disputed by the applicant. The reporting was apparently based upon false or incorrect timesheets submitted by educators to the applicant and relied upon by it to report to the respondent. The applicant’s reports led to amounts being paid to the applicant by the Commonwealth, and to payments in turn made by the applicant to the educators.
The contravention is a serious one, involving as it does a financial detriment to the Commonwealth, at least for a time. In no case does the evidence reveal that the applicant knew any of its reports to be false at the time when they were made. Thus one question bearing on the issue of severity of the contravention relates to the supervisory system employed by the applicant. Was a monthly inspection sufficient for the purpose? Mr Mohamud asserted that it was thought to be sufficient. The respondent led no evidence to the contrary. Unless the applicant became aware of dishonesty on the part of an educator, it may have had no reason to accelerate its monthly checks. The evidence does not permit me to say more than that the contravention, in and of itself was a matter of concern. Nor can I be properly satisfied on the meagre evidence before me either that the applicant had no reasonable basis to exercise closer supervision of its educators’ time sheets, or that there were no circumstances which ought to have alerted the applicant to the fact that the timesheets were not correct. 419 sessions of care out of more than 500,000 sessions of care represents a very small proportion of cases where the children were overseas, as one would expect.
Excess of ratio allegations
The respondent asserts that the applicant breached an obligation imposed on the applicant that no more than seven children may be cared for at once by the same educator. The allegation is that in 5217 sessions of care, the ratio was exceeded. The applicant says that it could not examine more than 800 cases, and that in each of those cases the ratio was not “physically exceeded” in the sense that the educators never had more than 7 children in care. The applicant accepts that it booked more than seven children but explains that it did so because the parents wanted less hours of care but were required by the applicant to book longer hours and to pay for those longer hours. The reply of the respondent is that if hours are booked, the duty of the applicant is to honour the booking in case the parents require it.
In particular the respondent submits that because the hours booked were paid for by the parents, the period of time booked amounted to a session of care as defined in the Child Care Benefit (Session of Care) Determination 2000 (or 2016) (Cth) and because reg 124 of the Education and Care Services National Regulations (National Regulations) prohibits more than 7 children in care at any given time, the effect of the applicant putting in care another child in place of the child who booked a session of care was to prohibit the return of the original child, in breach of the relevant Determination.
The respondent’s argument is very technical. A child would not normally be regarded as being prevented from attending unless the child were physically excluded (by being actually refused admission). Moreover, reg 124 may make an excess of ratio illegal, without the consequence of the reintroduction of the original child being “prohibited” by the applicant itself. The prohibition would be upon the applicant and the educator, not done by the applicant or the educator.
Even if, contrary to what I have just said, the respondent’s argument were correct, if, as I accept, the applicant believed its “common sense” approach to be correct, the posited contravention lacks the quality of a serious contravention.
For completeness it should be added that the behaviour of the applicant in relation to those sessions of care (numbering 800) which it has been able to investigate suggests to me that it is likely that for the remaining 4417 sessions of care, it acted similarly.
The respondent also submitted (its C1 group of assertions) that the timesheets produced by the applicant were unreliable. Various departures from proper recording procedures such as failures to date the documents or failures to date the signatures of parents were identified, none of which, whether taken alone or together, satisfy me that the timesheets as a whole were unreliable. The dates of the documents, for example, emerge from other information on the forms.
So far, I have discussed the contraventions which I identified in [5] above as the principal alleged contraventions. There were other, admitted contraventions. They include errors made in reporting absences as attendances, for before or after care, which amounted to some 88 or 89 non-compliant reports. The applicants say that these reports were the result of administrative and human error and point out that they represent a small minority of reports submitted over the period when the applicant’s approval was in force. Perfection in reporting may be unattainable in the course of a large provider’s activities. On the other hand, in relation to any fresh approval, for example, attention may need to be given by the respondent to business plans of the applicant company in relation to expansion intentions, to improve compliance. This matter is discussed below.
The other contraventions in this matter, all of which are admitted by the applicant, are as follows: 22 cases in which sessions of care overlapped (i.e. cases in which children were recorded as attending care in two places at once); 225 sessions of care where it was incorrectly reported that children attended before school care; and 195 cases in which enrolments were reported late.
Debts owing by the applicant to the respondent.
The respondent asserts that the applicant owes sums of money to the respondent. That subject-matter is dealt with in an exchange of emails between the parties following the hearing. The applicant accepts only that there is an agreed balance in the course of being repaid by the applicant under payment arrangements made between the applicant and Centrelink, which are being honoured by the applicant.
On that basis, the applicant submits that the respondent’s assertions are incorrect. The applicant’s assertions about the debt issues in dispute appear to me to be correct in all respects.
Consideration
The various contraventions by the applicant of the legislation, whether admitted or not, must be considered together when the Tribunal reviews the suspension and cancellation decisions. I have rejected the alleged “excess of ratio” contraventions.
The mandatory factors to be taken into account as discussed in clause 4 of the Breach Determination set out above, require (a) an assessment of the severity of the failure to comply with conditions for continuing approval, (b) the frequency of the failures, and (c) the question of whether the failures may threaten the health or welfare of any child in care.
I have already made findings negativing factor (c) in relation to the educator overseas category of case, and I similarly reject it in the case of the other contraventions.
There was much that was good in relation to the applicant’s conduct of its business. They offered tuition to children in their care about particular local and other matters which they did not have to do. The evidence suggests that the training they gave their educators and others appears to have been well designed.
The contraventions, as to the educator overseas allegations (in fact about incorrect statements made by the applicant) are serious in my opinion, albeit that they involved no monetary disadvantage to the Commonwealth since I have accepted that relief educators were in fact employed, and the children overseas category of cases involved no dishonesty on the part of the applicant as distinct from certain of its educators. While its systems failed to detect the dishonesty of the educators while it occurred, I cannot find on the evidence that the systems were defective on industry standards, since, as I have said, the busines of the applicant was a large one and I have no expert evidence suggesting that the steps taken by the applicant to supervise its educators were unreasonable.
Taking an overall view of the contraventions which I have found to be established, it seems to me that the decision of the respondent to suspend and in due course to cancel the approval of the applicant was correct. In particular, I have in mind the applicant’s repeated failure to keep the respondent advised of the true names of educators engaged to provide care, and to advise that the various necessary checks of their qualifications had taken place as contraventions of great seriousness. Mr Mohamud effectively directed that the false statements be made to the respondent on occasions when relief educators were engaged.
I do not treat statements by the applicant that if re-approved, it will not repeat the practice, as substantially diminishing the seriousness of the past contraventions. A serious breach is not, speaking generally, to be regarded as less serious because it is admitted.
The suspension and cancellation reviewable decisions will therefore be affirmed.
The fresh application for approval
The third reviewable decision before the Tribunal for consideration relates to the question of the re-approval of the applicant. If I do not affirm the respondent’s adverse decision in that respect, I must decide whether to remit the matter to the respondent or to substitute a different decision.
Three main matters need consideration in my opinion. The first relates to the significance of the prior contraventions and the bearing of those matters on the question of whether the applicant and its director and manager are fit and proper persons. Section 194E of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) provides as follows:
(1) The Secretary must have regard to the following matters in determining whether a person is a fit and proper person for the purpose of paragraph 194C(b), (c) or (d) or 194D(c) or (d):
(a) any non-compliance by a relevant person with a law of the Commonwealth or a State or Territory;
(b) any proceedings currently before a court or tribunal that involve a relevant person;
(c) any decision made under a law of the Commonwealth or a State or Territory relating to child care which adversely affects a relevant person;
(d) subject to Part VIIC of the Crimes Act 1914, any conviction, or finding of guilt, against a relevant person for an offence against a law of the Commonwealth or a State or Territory, including (without limitation) an offence against children, or relating to dishonesty or violence;
(e) any order for a relevant person to pay a pecuniary penalty for the contravention of a civil penalty provision of a law of the Commonwealth or a State or Territory;
(f) any act of a relevant person involving fraud or dishonesty;
(g) the arrangements the person has:
(i) to ensure the person complies with the family assistance law; and
(ii) to ensure anyone the person is responsible for managing complies with the family assistance law;
(h) the record of administering of Commonwealth, State or Territory funds of a relevant person;
(i) any debts to the Commonwealth incurred by a relevant person (whether or not the debt has been discharged);
(j) the record of financial management of a relevant person, including any instances of bankruptcy, insolvency or external administration involving the person;
(k) any other matter prescribed by the Minister’s rules;
(l) any other matter the Secretary considers relevant.
(2) For the purposes subsection (1), a relevant person is:
(a) the person; and
(b) another person or body in respect of which the person is or has ever been a person with management or control.
The second matter needing consideration is the fact that the applicant at the present time has a cap on its business as a result of dealings of the applicant with the NSW State authorities, and this may affect the relationship between a Commonwealth approval and the relevant State approval. The third matter relates to the effect of NSW health orders as to Covid vaccination of educators, and the business plans of the applicant as a result of such orders.
As to the first matter, having heard extensive cross-examination of Mr Mohamud and Ms Omar, and considered their situation, I am satisfied that they are fit and proper persons to obtain renewal of approval to offer child care services. It is true that the contraventions which the applicant has been found to have caused, in some instances at their direction were serious. But the consequence suffered by the applicant is the loss of a large and no doubt valuable business as a result of the cancellation of their approval. I am satisfied that relief educators will be properly notified in the future.
Mr Mohamud and Ms Omar have continued to improve their educational and professional qualifications since the cancellation decision, and I do not doubt that they are enthusiastic about making their future in the child care industry. They grew the business which they have lost because of the same enthusiasm and it seems to me that they will do their best to ensure that they do not again fall below proper standards. Their assurance that they will not again engage in the behaviour I have criticised about the relief educators is in my opinion acceptable in those circumstances.
For those reasons, I find that Ms Omar and Mr Mohamud satisfy the fit and proper person considerations mentioned in s.194E of the Act.
As to the second matter, the eligibility rules in s.194C(a) requires the applicant for approval to hold any approvals or licences required to operate a child care service under the law of the State or Territory in which the service is situated. The evidence indicates that until recently, when the State approval was cancelled, there was a cap on the number of services which the applicant could provide in New South Wales. Whether the NSW cap, in the light of s.194C(a), affects the power of the respondent to grant an approval for any number of services above the NSW cap is a matter to be determined.
Consultation between the NSW authorities about the number of services permitted by the respondent to be conducted by the applicant appears to be desirable in any event, even if the NSW cap is found not to affect the powers of the respondent in the light of s.194C(a).
In any event, the approval which the respondent may grant is in respect of “one or more other child care services” that the provider operates or proposes to operate as s. 194B(2) provides. The question of the number of child care premises which the applicant desires to utilise requires the applicant to identify the number of such premises. If the number of those premises is regarded as too large, the respondent may consider approving only a lesser number. If the applicant later desires to increase that number it must presumably make a further application to the respondent. That will enable the respondent to keep track of any expansion of the applicant’s business, and to consider whether the applicant is employing sufficient coordinators to supervise the educators.

As to the third matter, public health orders are varied from time to time in New South Wales. At the time when the applicant brings forward its current application, its business plan will need to demonstrate its ability to comply with health orders, including any requirement that the educators be fully vaccinated.
Since these proceedings were heard, the State authorities have cancelled the approval. The applicant applied to the NCAT for review of that decision. That decision means that the applicant will need to apply to the State authorities for renewal of the State approval. It is desirable for the respondent to consult with the State authorities about any cap which should be put upon the applicant’s service, if it is operate again. The eligibility rules in s.194C(a) require the applicant to hold any approvals or licences required to operate a child care service under the law of the State or Territory in which the service is situated.
For both authorities, the number of premises proposed to be operated by the applicant will be relevant. For example, the respondent may consider that the proposed number is too large in the light of the history of the applicant. If the applicant later proposes to increase the number of premises, that will presumably require a further application to be made to the respondent and also the State authorities, if a cap has been imposed by the State authorities. That will enable the respondent to track any expansion of the applicant’s business and to consider whether sufficient coordinators of other administrative staff have been employed by the applicant to manage any proposed expansion.
The practical position is that the applicant, if it is to resume its desired business, must have approval from the State and Commonwealth bodies. It does not seem to me that, as the respondent has submitted, these proceedings are now futile because of the cancellation of the State approval. The reasons of the NCAT do not suggest that there is any insuperable barrier to the applicant obtaining a fresh State approval in due course.
The third reviewable decision will be set aside and the matter will be remitted to the respondent with the direction the applicant’s director and manager satisfy the fit and proper person requirements of s.194E of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).

I certify that the preceding 114 (one hundred and fourteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM QC

.................................[SGD].......................................
Associate
Dated: 24 August 2022

Date(s) of hearing: 24 - 28 August 2020 & 17 November 2020

Date final submissions received: 27 July 2022

Counsel for the Applicant: Mr T Liu

Solicitor for the Applicant: Mr S Bergsson, Mills Oakley

Solicitor for the Respondent: Ms J Liang, Clayton Utz

[2022] AATA 2755

24 August 2022

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Breach

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Date(s) of hearing:	24 - 28 August 2020 & 17 November 2020
Date final submissions received:	27 July 2022
Counsel for the Applicant:	Mr T Liu
Solicitor for the Applicant:	Mr S Bergsson, Mills Oakley
Solicitor for the Respondent:	Ms J Liang, Clayton Utz