Jessica Education Centre Pty Ltd and Secretary, Department of Education and Training
[2019] AATA 3739
•23 September 2019
Jessica Education Centre Pty Ltd and Secretary, Department of Education and Training [2019] AATA 3739 (23 September 2019)
Division:GENERAL DIVISION
File Numbers: 2018/5642 & 2018/6985
Re:Jessica Education Centre Pty Ltd
APPLICANT
AndSecretary, Department of Education and Training
RESPONDENT
DECISION
Tribunal:The Hon. John Pascoe AC CVO, Deputy President
Date:23 September 2019
Place:Sydney
The reviewable decision of the authorised review officer of the Respondent dated 4 September which upheld the earlier decision to cancel the Applicant’s approval as a provider of childcare services is affirmed.
..................................[sgd]......................................
The Hon. John Pascoe AC CVO, Deputy President
CATCHWORDS
CHILDCARE – education and care services – family assistance law – child care benefit – continued approval of a childcare service – breach of conditions of provider approval – whether sanction should be applied – what sanction is appropriate – decision affirmed
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – as prior to 2 July 2018
A New Tax System (Family Assistance) Act 1999 (Cth) – as prior to 2 July 2018
Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth)
CASES
Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706
SECONDARY MATERIALS
Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017
REASONS FOR DECISION
The Hon. John Pascoe AC CVO, Deputy President
23 September 2019
This is an application for review of a decision made by an authorised review officer of the Respondent on 4 September 2018 which affirmed an earlier decision made by a delegate of the Respondent to cancel the Applicant’s approval as a provider of childcare services.
The relevant events and timeline in this matter is usefully summarised in the Respondent’s Statement of Facts, Issues and Contentions, which was not contested, as follows:
Date
Facts
30 May 2013
The Applicant was registered as a proprietary
company in New South Wales.
Mrs Youn Hee Choi has been a director of the company since its incorporation, and continues to be a director.
25 February 2014
Mrs Youn Hee Choi and Mrs Tae Rim Kwak (both directors of the Applicant at the time) applied on
behalf of the Applicant for approval as a provider/operator of the childcare service Korean Australian Family Day Care (KA Family Day Care).
3 March 2014
Korean Australian Family Day Care was approved by the delegate of the Respondent pursuant to section 195 of the Administration Act.
11 July 2017
The Respondent wrote to various child care
services in relation to sessions of care that had been reported by the Applicant which overlapped with those other child care services.
11 July 2017
The Respondent received documents from Hornsby Central Preschool Kindergarten in response to the Respondent's request dated 11 July 2017.
11 July 2017
The Respondent received documents from Happy Faces Early Learning Centre in response to the
Respondent's request dated 11 July 2017.
11 July 2017
The Respondent received documents from KU
Village Green in response to Respondent's request dated 11 July 2017.
12 July 2017
The Respondent received documents from
Woodstock Childcare Centre in response to Respondent's request dated 11 July 2017.
12 July 2017
The Respondent received documents from Waratah
Montessori Preschool in response to Respondent's request dated 11 July 2017.
12 July 2017
The Respondent received documents from Bright
Start Kidz ELC in response to Respondent's request dated 11 July 2017.
12 July 2017
The Respondent received documents from Essex
Street Kindy in response to Respondent's request dated 11 July 2017.
12 July 2017
The Respondent issued a notice under section 158
of the Administration Act, for the purposes of
section 154 of the Administration Act, requiring theApplicant to provide certain documents.
13 July 2017
The Respondent received documents from Hornsby
Heights Preschool in response to Respondent's
request dated 11 July 2017.
17 July 2017
The Respondent received documents from Care for
Kindies in response to Respondent's request dated 11 July 2017.
18 July 2017
The Respondent received documents from
Appletree Preschool in response to Respondent's request dated 11 July 2017.
19 July 2017
The Respondent received documents from Fair
Tales Preschool and Long Day Care Centre in response to Respondent's request dated 11 July 2017. 20 July 2017
The Respondent received documents from Northmead Early Education in response to Respondent’s request dated 11
July 2017.
24 July 2017
The Respondent received documents from Active
Learning International Preschool in response to Respondent's request dated 11 July 2017.
24 July 2017
The Respondent received documents from
Greenwood Gladesville in response to Respondent’s request dated 11 July 2017.
24 July 2017
The Applicant provided a response to the
Respondent's section 158 notice.
25 July 2017
The Respondent received documents from Sophie's
Cottage Kindergarten in response to Respondent's request dated 11 July 2017.
20 September 2017
The Respondent wrote to the Applicant about the
Applicant's apparent contraventions under sections 10(1A), 21 and 21A of the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Eligibility Determination).
29 September 2017
The Applicant wrote to the Respondent to advise that it had updated the status of the educators on the software system.
Further correspondence was subsequently exchanged between the Applicant and the Respondent in October 2017 in relation to this update. 8 November 2017
The Respondent issued a Notice Of Intention To
Impose Sanction upon the Applicant under section 201 of the Administration Act.
4 December 2017
The Applicant provided a response to the
Respondent's notice of intention to impose sanction.
6 December 2017
The Applicant provided a further response to the
Respondent's notice of intention to impose sanction. 12 December 2017
The Applicant provided a further response to the
Respondent's notice of intention to impose sanction. 15 December 2017
The Applicant provided a further response to the
Respondent's notice of intention to impose sanction.
8 February 2018
The Applicant's legal representative (EMIL Ford
Lawyers) wrote to the Respondent in response to
the Respondent's notice of intention to impose
sanction.15 February 2018
r
The Respondent issued a notice under section 158 of the Administration Act to the State Regulatory Authority (NSW Department of Education) (SRA) to request records relating to the operation of KA
Family Day Care.1 March 2018
The SRA produced documents in response to the Respondent's notice issued under section 158 of the Administration Act.
7 March 2018
The Respondent wrote to the Applicant about the additional information received from the SRA and continuing contraventions, and invited the Applicant to make further submissions.
16 March 2018
The Applicant provided submissions in response to the Respondent's invitation for further submissions.
3 April 2018
The Delegate of the Secretary imposed a sanction
of cancellation under section 200 of the
Administration Act (cancellation decision).11 April 2018
The Respondent wrote to the Applicant requesting educator details.
30 April 2018
The Applicant requested an internal review of the cancellation decision.
14 May 2018
The Applicant provided a bundle of documents in support of their request for internal review.
4 September 2018
The Authorised Review Officer (ARO) affirmed the
cancellation decision under internal review (the
reviewable decision).21 September 2018
The Applicant applied to the Tribunal for a review of the reviewable decision.
25 March 2019
The Respondent wrote to the Applicant in relation to further instances of non-compliance and invited the Applicant to respond to the further non-compliance.
28 March 2019
The Applicant informed the Tribunal and the
Respondent that it does not intend to file a
statement of facts, issues and contentions or
provide any further evidence.
When looking at the relevant legislation it is important to note that Part 8 of the A New Tax System (Family Assistance) (Administration) Act 1999 was amended on 2 July 2018 by the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (‘the JFF Act’). The amendments made by the JFF Act contained transition provisions in Schedule 4, which provided that the law that applied up to 2 July 2018 continued to apply in respect of breaches of the conditions for the approval of the service.
Accordingly the relevant legislation is as follows:
·A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) as it was prior to 2 July 2018 (‘Administration Act’)
·A New Tax System (Family Assistance) Act 1999 (Cth) as it was prior to 2 July 2018 (‘Assistance Act’).
There are three issues to be determined:
(a)whether the Tribunal is satisfied that the Applicant failed to comply, or is not complying, with a condition for continued approval as an operator of an approved child care service under the family assistance law; and
(b)if so, whether to impose a sanction on the Applicant, and
(c)if so, which sanction to impose.
The original decision-maker found that the Applicant did not comply with a number of conditions for continued approval, that the non-compliance was serious and widespread, and that a sanction should be applied. They determined that the most appropriate sanction was cancellation of the child care service’s approval under section 200 of the Administration Act.
CAN THE TRIBUNAL BE SATISFIED THAT THE APPLICANT HAS NOT COMPLIED, OR IS NOT COMPLYING WITH A CONDITION FOR CONTINUED APPROVAL OF CHILD CARE SERVICE UNDER THE FAMILY ASSISTANCE LAW?
The alleged breaches which led to the eventual cancellation of the Applicant’s registration fall into a number of broad categories.
Firstly, breaches of section 219N of the Administration Act which requires the Applicant to give the Respondent a report for each week in which the Applicant provides child care for a child (‘the attendance report’). The attendance report must include attendance details, as well as any information required for the Secretary to determine:
(a)whether a fee reduction is applicable (section 219N(4)(a)(i));
(b)entitlement to child care benefit (section 219N(4)(a)(ii);
(c)amounts of child care rebate that are payable (section 219M(4)(aa)); and
(d)any other information required by the Respondent (section 219N(4)(b)).
This is a critical document because public money is paid on the basis of this report. The original decision-maker found the Applicant had committed breaches by doing the following:
(a)reporting 447 sessions of care when that care could not have been provided because the educators were overseas at the time those sessions of care were reported;
(b)reporting 471 sessions of care when that care could not have been provided because the children were overseas at the time those sessions of care were reported;
(c)reporting 39 sessions of care that could not have occurred because those sessions of care overlapped with sessions of care reported by other services;
(d)reporting 595 sessions of care as “absences” under section 10 of the Assistance Act before the child had either commenced with the service, or after the child had permanently ceased to attend the service, and were therefore not absences;
(e)reporting 85 sessions of care that were not provided as reported, where visits to the educator’s homes indicated that care was not being provided on the days that those sessions of care had been reported;
(f)submitting 1,036 enrolment reports between the period of 1 January 2015 and 15 October 2017, and 19 enrolment reports between the period of 22 October 2017 and 14 January 2018, outside of the timeframes prescribed by subsection 219AB(2) of the Administration Act; and
(g)submitting 528 attendance reports between the period of 1 January 2015 and 15 October 2017 and 47 attendance reports between 28 November 2017 and 7 February 2018, outside the timeframes prescribed by subsection 219N(5) of the Administration Act.
Further breaches in addition to those described in the decision of the original decision-maker were outlined by the Respondent.
The decision-maker found that as a result of these inaccuracies in reporting, the Applicant was incorrectly paid child care fee subsidies and could not pass on fee reductions as required by sections 219B and 219EA of the Administration Act. In accordance with sections 219QB and 219QE of the Administration Act, the Applicant was required to immediately remit those payments to the Respondent, but did not do so.
The decision-maker also found that the Applicant failed to comply with a number of other relevant provisions under subsection 196(1) of the Administration Act, which states that it is a condition for the continued approval of an approved child care service that the service satisfies the eligibility rules. The relevant eligibility rules that applied at the time of the original decision were the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (‘Eligibility Rules’). The Applicant was found to not meet the following conditions under the Eligibility Rules:
(a)an applicant must be a suitable person to operate a child care service – section 7;
(b)each carer employed by a child care service must be a suitable person to provide child care – section 9;
(c)the undertaking that an applicant must enter into in relation to the operation of a child care service – section 10;
(d)an applicant must undertake to do the things set out in section 10A to monitor compliance in relation to the suitability of staff – section 10A;
(e)the requirement for compliance by applicants with all applicable legal requirements imposed by a law of the Commonwealth or a law of the State or Territory in which the service operates – section 11; and
(f)the requirement for an operator of a child care service to continue to be a suitable person to operate the service – section 16.
The decision-maker further found that the Applicant had contravened subsection 196(3) of the Administration Act by not complying with the Education and Care Services National Law and the Education and Care Services National Regulations in the following ways:
(a)by reporting a significant number of instances where the required educator to child ratio was not met;
(b)by not registering information in relation to ‘relief educators’ and not demonstrating that it had taken appropriate assessments to ensure that each of these relief educators are over 18 years of age, holds relevant qualifications and meets the minimum requirements of the regulations; and
(c)by failing to accurately keep record of attendance of children.
Consideration
It was not contested that under section 195A of the Administration Act the Applicant (as the operator of the child care service) was responsible for complying with the requirements of the relevant legislation. Further, the Applicant was responsible for non-compliance by staff and agents, including educators. In Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706, Senior Member Cremean stated at [26]:
Finally, I see no merit in Moonlight blaming the educators involved: Moonlight had a clear obligation imposed on it by Commonwealth law and it is not in point to explain away failure to meet that obligation by referring to the errors of others. This shows up in my view as a failure of governance which is central to the admitted breaches of the Applicant.
I note that during the course of her evidence, the Applicant did apologise for a number of breaches, including breaches which she said were a result of computer system failures. She also drew the Tribunal’s attention to the failure of educators to submit their timesheets properly, including during periods when they were overseas. The Applicant said that these were clerical errors because although the hours may have been worked, it was just put under the normal educator’s name and not that of the relief educator.
The Applicant said that she fully understood the relevant law.
The Applicant did say that she had difficulty understanding changes in rules during the period and also that some of the breaches occurred during a difficult time of her life.
The Applicant also drew the Tribunal’s attention to the difficulties for parents, children and educators for whom English was a second language.
The Applicant had offered to pay back various overpayments to the Commonwealth.
I note that the Applicant did not take the opportunity to present additional material to the Tribunal to demonstrate that the service had not breached its obligations under the relevant law.
The Applicant stated that she had not provided child care after the cancellation of her licence.
The Applicant accepted that she did not meet her responsibilities in relation to familiarising staff with the need for all staff to comply with the relevant legislation and that she had failed to provide the Respondent with appropriate details of relief educators.
The Applicant blamed software errors in the ‘Harmony’ software package used by the service for making claims in respect of children who were not there.
In light of all of the evidence, I am satisfied that the Applicant has not complied with multiple conditions for continued approval of a child care service under the family assistance law, and that those breaches were not an isolated event.
SHOULD A SANCTION BE APPLIED?
Subsection 200(1) of the Administration Act provides that if an approved child care service has not complied, or is not complying, with a condition for the continued approval of the service, one of a number of sanctions can be imposed.
When determining whether a sanction should be imposed, decision-makers are required to consider the Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 (‘Breach Determination’). Subsection 4(1) of the Determination requires the following factors to be taken in to 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.
It is quite clear from the evidence, including the evidence of the Applicant, that there were large-scale and continuing breaches of reporting requirements which led to the overpayment and misuse of public funds. The fact that the Applicant was prepared to repay monies does not excuse the failure to provide accurate reports in the first instance. The fact that flaws in the Harmony software package used by the Applicant may have been responsible for many of the problems is not an excuse. It was up to the Applicant to provide an appropriate reporting system and there was no evidence that the Applicant ever alerted the Department to the problems with the Harmony software when these problems were occurring and may have been affecting the accuracy of reporting.
The Applicant also failed to properly educate and supervise the staff at the centre. Failure to ensure that staff were aware of, and met their obligations, potentially places children at risk and is a critical issue in relation to welfare of children attending the centre. It is also of concern that the Applicant did not seem to know which educators were taking care of children at particular times. I place considerable weight on the number of occasions on which officers from the Department visited locations where children were said to be in care, only to find that the children were in fact not there, or that the person who was supposed to be responsible for their care was not there, and that they were in the care of a third party.
It was the evidence of the Respondent, which was not contested, that the Applicant had on some 2,625 occasions exceeded the permitted ratio of one educator per seven children in care, and on 3,165 occasions exceeded the permitted ratio of at least one educator for each four pre-school aged children in care.
While some of those breaches may be easily explicable, the total number is simply too large to be ignored and could be seen to indicate a reckless disregard for both the requirements of the law and the welfare of the children in care, particularly very young children and children who may have social or language difficulties.
This apparent lack of care is compounded by the fact that ‘relief’ educators seem to have been engaged without proper background checks. This alone exposed children to the risk of serious harm.
The number of breaches, the severity of those breaches, as well as the failure to properly check the background of educators and to be aware of what was happening throughout the centre must be considered as contrary to the best interests of the children, regardless of the Applicant’s good intentions. In my opinion this is sufficient to mean that a sanction should be applied.
WHAT SANCTION IS APPROPRIATE
This matter raises two very serious issues. Firstly, the care and welfare of children, especially very young children, and secondly, the misuse of public funds. To some extent, the issues are intertwined, for example where there has been a failure to provide proper oversight of educators or a failure to be aware of what was happening “on the ground”. Both issues go to the very heart of the Applicant’s suitability to hold a licence under the relevant legislation.
The breaches have been both extremely serious and very frequent. The misreporting of attendances has resulted in a significant misappropriation of public money but perhaps of even greater seriousness is the apparent failure to ensure that the educators were aware of their responsibilities, that the educators were properly supervised and that the whereabouts of the educators and the children for whom they were responsible were known at all times. When it comes to the welfare of children there is no place for non-compliance or any lack of vigilance in relation to all aspects of their safety and well-being.
I accept the Applicant’s evidence as to the pressures faced in operating the centre, as well as the difficulties arising due to the fact that for many of the educators, the children and their parents, English was a second language. I also accept that the Harmony software program caused very significant difficulties in reporting to the department and meeting requirements. Mrs Choi, a director of the child care service who represented the Applicant at the hearing, came across to me during the course of the hearing as both intelligent and caring. I am sure that the demands of running a large childcare operation became overwhelming for her, particularly given her lack of experience.
Despite this however, the legislation is clear as to the responsibilities of the operator and it is also clear that these responsibilities cannot be delegated to others. I note that section 4A of the Breach Determination creates a presumption in favour of cancellation in circumstances where there are repeated breaches of reporting obligations or there are contraventions involving a failure to comply with obligations relevant to children’s health and safety.
As outlined above the failures to comply in this case were very serious in number and even more alarming in terms of the potential risk to children. Taken together it is hard to conclude that any sanction other than cancellation of the Applicant’s license is the appropriate one.
I have considered the possibility of suspending the license but again, the nature of the breaches and the number of the breaches points to a reckless disregard for the welfare of the children, the obligations in relation to the use of public funds and the obligations to exercise due care and diligence in reporting.
I note that the Applicant does have the opportunity to apply for a new licence under the current provisions relating to the operation of child care centres which came into operation on 2 July 2018.
DECISION
The reviewable decision of the authorised review officer of the Respondent dated 4 September which upheld the earlier decision to cancel the Applicant’s approval as a provider of childcare services is affirmed.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of The Hon. John Pascoe AC CVO, Deputy President
.............................[sgd]...........................................
Associate
Dated: 23 September 2019
Date of hearing: 13 August 2019 Advocate for the Applicant: Mrs Y H Choi Advocate for the Respondent: Mr T Aviram Solicitors for the Respondent: Clayton Utz
2
1
0