Global Family Day Care Pty Ltd and Secretary, Department of Education
[2020] AATA 433
•9 March 2020
Global Family Day Care Pty Ltd and Secretary, Department of Education [2020] AATA 433 (9 March 2020)
Division:GENERAL DIVISION
File Number(s): 2019/7440
Re:Global Family Day Care Pty Ltd
APPLICANT
AndSecretary, Department of Education
RESPONDENT
DECISION
Tribunal:Deputy President B W Rayment OAM QC
Date:9 March 2020
Place:Sydney
Pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that, until further order of the Tribunal:
1.the decision of the Respondent dated 11 November 2019 is stayed;
2.on the condition, subject to the consideration by the Tribunal of any submissions on the terms of the following conditions by either party on or before 16 March 2020, effective from 20 March 2020, that:
a.the Applicant uses its best endeavours to ensure there is no overpayment of child care subsidy funds between now and the determination of the proceedings;
b.if an overpayment of child care subsidy funds comes to the notice of the Applicant, the Applicant is to repay it forthwith.
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Deputy President B W Rayment OAM QC
CATCHWORDS
PRACTICE AND PROCEDURE – application for stay of operation of reviewable decision – where applicant cannot operate if stay is not granted – where no other day care facilities available in the area – where not in the public interest – where previous stays ordered by consent – where applicant has opportunity to rectify non-compliances – stay application granted
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth) s 41(2)
CASES
Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1640
REASONS FOR DECISION
Deputy President B W Rayment OAM QC
9 March 2020
The applicant seeks a stay of a reviewable decision made by the respondent that affirmed an earlier decision under the A New Tax System (Family Administration) (Administration) Act 1999 (‘the Act’) to cancel the approval of the applicant to provide child care services for the purposes of family assistance law.
The applicant has applied to the Tribunal to review that decision.
The Tribunal has power to grant a stay pending the hearing of the review application under s 41(2) of the Administrative Appeals Tribunal Act 1975, if it considers that it is desirable to do so, after taking into account the interests of any persons who may be affected by the review. The Tribunal has the power to make such order or orders staying or otherwise affecting the operation or implementation of the decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
The parties have agreed to a stay of the reviewable decision in proceedings before the Federal Court. That consensual position was obtained in August 2019 and again in November 2019 and is effective up to the determination of this stay application. The parties have indicated that proceedings will be ready for hearing in twelve weeks, and will take either two or three days to hear. The Tribunal can allocate such a hearing in about twelve weeks’ time.
The Act puts the obligation of compliance with a variety of provisions on providers, such as the applicant. When considering sanctions for any breach, it is open to a provider to rely upon mitigating factors. For example, if a provider has done what is reasonable to supervise defaulting educators, a sanction of cancellation may be too harsh. On the other hand, if personal default of the provider has led to a breach, it may be that no mitigating factor will be found to exist. If supervision has been inadequate when a matter is drawn to attention by the regulator, the provider may be able to show that it has established a system of supervision which is and will be effective, and thus show at the date of hearing that the sanction of cancellation is inappropriate. Sanctions other than cancellation are available in the event of breach, and may be appropriate depending on the circumstances of the case.
The applicant submits that it has not had an opportunity to respond to some matters of concern referred to in the reviewable decision. That kind of case is unlikely to be available at a final hearing in the Tribunal. They will have that opportunity at a hearing in the Tribunal. Similarly, other departures, if any, from the duty of fairness before the regulator should not affect a hearing before this Tribunal. If any allegation of non-compliance is made out, the applicant may assert and prove at the hearing that the non-compliance has been or will be rectified.
Proceedings are also pending between the applicant and the NSW regulator in the NSW Civil and Administrative Tribunal (‘NCAT’). I was informed that they have been, by consent, the subject of a conditional stay. The effect is that the applicant continues to trade, albeit with less educators and without the ability to accept further children into day care for the time being.
One matter, the subject of evidence filed by the applicant, is that in light of the socio‑economic group of the parents of the children for whom the applicant provides day care services to, the applicant could not continue to trade without the Commonwealth child care subsidy (‘CCS’). Moreover, the parents who presently receive the benefit of the CCS will not likely be able to source alternative day care facilities of the kind they desire in the Fairfield area. That would not be in the public interest, especially if the applicant succeeds in keeping its approval to provide day care services on this review.
The respondent criticised the way in which the applicant has proved that it would need to close its doors in a short time if the subsidy is not paid. I would not reject the evidence on that ground. The deponent, Mr Gaal, told me that his background and his position as the director of the applicant makes him qualified to know its financial position. I was also told that no personal default of Mr Gaal is suggested in the case by the respondent.
Mr Robinson SC, who appeared for the applicant with Mr Jared Bennett of counsel, told me that part of his case will involve planned rectification by the applicant. Some months will pass before this case comes on for hearing and there will likely be time for the applicant to demonstrate its capacity to rectify any systemic errors, if the Tribunal grants a stay.
To some extent, at least the applicant concedes past non-compliances. Those concessions are matters to be considered against the totality of the evidence at the hearing, which is not available to be considered at this stage.
Mr Robinson SC also drew attention to a number of conclusions in the reviewable decision of which he was critical. Those submissions are of some relevance to this application but, since it is the reviewable decision rather than the reasons for it which will be critical to the outcome of the case, I do not need to consider those submissions in detail.
Mr Robinson SC relied upon some remarks made by Wheelahan J in Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training [2018] FCA 1640 at [33]—[37]. His Honour’s remarks were made in interlocutory proceedings on a judicial review proceeding relating to the question of whether it was open to the provider to seek to mitigate a non-compliance with the legislation by showing that others, including educators, were to blame for the contravention. In an appropriate case, if the applicant had a reasonable system of supervision of educators, it may be able to mitigate a non‑compliance. That would require an examination of the facts.
The respondent asserts that the applicant is indebted to the respondent in the sum of $36,591.35 and that the applicant also received an additional overpayment of $31,352. Those amounts, if satisfactorily proved, and any payment made by the applicant or explanation for non-payment may well become important and in the respondent’s favour on the review. However, their ultimate significance must be evaluated when all the relevant facts and circumstances are taken into account. I note that the applicant has received a total of more than $6 million in CCS payments since 1 July 2018, which provides some context to the amount of the overpayments claimed.
The pending proceedings in the NCAT between the applicant and the NSW regulator may result in a determination relevant to the hearing of these proceedings, because amongst the allegations of the respondent is an allegation of breach of applicable NSW law. Those proceedings are to be heard by NCAT in May this year.
The pendency of proceedings between the state regulator and the applicant, the conditional stay agreed upon in those proceedings, and the fact that to date, these proceedings have been the subject of a stay by consent in the Federal Court for some six months, suggest to me that they should be the subject of a further stay for some twelve weeks. That is so the applicant can defend itself in both proceedings, which it might not otherwise be able to do, having regard to its present financial situation. Moreover, the applicant will have an opportunity to rectify any systematic failures of supervision of its educators and others, and to show at a final hearing that it has done so.
An undertaking as to damages has been proffered by the applicant. As at present advised, I do not place weight on that document because the Tribunal does not have power to assess or enforce any such damage. I note it only as a sign of good faith.
A stay of the reviewable decision seems to me to be desirable in the special circumstances of the case, but subject to a condition on which I will hear the parties within seven days. Unless otherwise directed, the condition will operate in ten days from the date of this decision. As is usual the stay will operate until further order. The condition which I have in mind is that the applicant uses its best endeavours to ensure that no overpayment of CCS funds occurs between now and the determination of the proceedings. If such overpayment comes to notice, the Applicant is to repay it forthwith.
I certify that the preceding 18 (eighteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM QC
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Associate
Dated: 9 March 2020
Date(s) of hearing: 21 February 2020 Counsel for the Applicant: Mr M Robertston SC with Mr J Bennett Solicitors for the Applicant: Vizzone Ruggero Twigg Lawyers Solicitors for the Respondent: Maddocks
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