Kids R Creative Family Day Care Pty Ltd v Secretary, Department of Education and Training
[2019] VSC 463
•19 July 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2019 01698
| KIDS R CREATIVE FAMILY DAY CARE PTY LTD (ACN 166 379 291) | Plaintiff |
| v | |
| SECRETARY, DEPARTMENT OF EDUCATION AND TRAINING | Defendant |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 May 2019, written submissions filed on 12, 18 and 21 June 2019 |
DATE OF RULING: | 19 July 2019 |
CASE MAY BE CITED AS: | Kids R Creative Family Day Care Pty Ltd v Secretary, Department of Education and Training |
MEDIUM NEUTRAL CITATION: | [2019] VSC 463 |
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COSTS – Plaintiff commenced a judicial review proceeding in respect of the suspension of the plaintiff’s approval as a provider of childcare services – Plaintiff sought internal review of the suspension decision – Initial decision of no legal effect upon making of internal review decision – Proceeding discontinued – Plaintiff ordered to pay defendant’s costs – Education and Care Services National Law Act 2010 ss 28, 190, 191 – Supreme Court (General Civil Procedure) Rules 2015 r 63.15.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S Martin | Mills Oakley |
| For the Defendant | Mr J Stoller | Victorian Government Solicitors Office |
HIS HONOUR:
The plaintiff operated an approved education and care service from May 2016 until 3 April 2019. On 3 April 2019, a delegate of the Secretary to the Department of Education and Training suspended the plaintiff’s provider approval under s 28 of the Education and Care Services National Law Act 2010 (‘National Law’). Section 28(1) provides:
The Regulatory Authority may suspend the provider approval on a ground referred to in section 25 without giving the approved provider a show cause notice under section 26 if the Regulatory Authority is satisfied that there is an immediate risk to the safety, health or wellbeing of a child or children being educated and cared for by an education and care service operated by the provider.
Pursuant to s 190(d)(i) of the National Law, the plaintiff had a right to seek internal review of the delegate’s decision. Such review is required to be conducted within 30 days of an application being made,[1] although this period may be extended by up to 30 days if further information is requested pursuant to s 191(4), or by agreement.[2]
[1]Education and Care Services National Law Act 2010 (Vic) s 191(5).
[2]Ibid s 191(6).
The plaintiff made an application for internal review of the delegate’s decision on 17 April 2019. Therefore, the internal review decision was required to be made, at the latest, on 17 May 2019 (if no new information was requested) or 17 June 2019 (if a request for further information was made by the person conducting the review).
At the completion of the internal review, the Secretary may confirm the decision or make any other decision that the Secretary thinks appropriate.[3] From that point in time, the original decision of the delegate is suspended, even if the plaintiff’s registration remains suspended. Thereafter the registration is suspended by virtue of the internal review decision.
[3]Ibid s 191(7).
The plaintiff has the right to seek review of an internal review decision by the Victorian Civil and Administrative Tribunal (‘VCAT’).[4] The VCAT has the power to stay the operation of a decision which it is reviewing.[5]
[4]Ibid s 193(1).
[5]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 50(3).
By originating motion filed on 17 April 2019, the plaintiff sought orders quashing the delegate’s decision of 3 April 2019. On the same day, a summons was filed seeking an order staying the suspension order. The summons was listed for hearing on 2 May 2019. On 29 April 2019, the plaintiff filed an outline of submissions in support of a stay application. The plaintiff submitted that the delegate’s decision was made in error by reason of:
(a) denial of procedural fairness;
(b) failure to take account of relevant considerations; and
(c) the decision being legally unreasonable.
At the commencement of the hearing on 2 May 2019, I raised with the plaintiff’s counsel the utility of the relief sought. On 17 April 2019, the plaintiff had sought internal review of the delegate’s decision. That internal review decision was required to be made by 19 May 2019. Upon the decision being made, the delegate’s decision of 3 April 2019 would cease to have any legal effect. Counsel for the defendant informed the Court that the internal review decision would in fact be made by 13 May 2019. The plaintiff’s summons seeking a stay was adjourned to 14 May 2019.
The internal review decision was made on 15 May 2019. The hearing of the plaintiff’s amended summons of 18 April 2019 was adjourned by consent to 21 May 2019 and thereafter to 28 May 2019 and 7 June 2019. Prior to the hearing on 7 June 2019, the parties sought a further adjournment by consent. This request was refused. On 6 June 2019, the parties provided consent orders, which were made, as follows:
1.The further hearing of the plaintiff’s amended summons filed 18 April 2019 listed for 7 June 2019 at 10:30 am before the Honourable Justice McDonald be vacated.
2. The plaintiff be granted leave to discontinue the proceeding.
3.The proceeding is discontinued save as to the determination of costs in the proceeding which is to be determined on the papers.
4.The plaintiff file and serve on the defendant short written submissions and any evidence in relation to costs in the proceeding by 12 June 2019.
5.The defendant file and serve on the plaintiff short written submissions in relation to costs in the proceeding by 18 June 2019.
6.The plaintiff file and serve on the defendant short written submissions in reply in relation to costs in the proceeding by 21 June 2019.
Both parties filed submissions and affidavits in support of their respective positions on costs. Neither party, in particular the plaintiff, complied with the Court’s order that the submissions be short. The plaintiff’s submissions ran to 17 pages.
The plaintiff submits that each party should bear their own costs up to 4 June 2019 and that the defendant should pay its costs from 5 June 2019. The defendant submits that the plaintiff should pay its costs.
Pursuant to r 63.15 of the Supreme Court (General Civil Procedure) Rules 2015, unless the Court orders otherwise, a party who discontinues a proceeding shall pay the costs of the party to whom the discontinuance relates to the time of discontinuance.
In Soteriadis v Nillumbik Shire Council,[6] Derham AsJ stated:
[6][2015] VSC 363.
By these rules the wide discretion of the Court as to costs is modified. The modification is that the onus is on the party seeking to discontinue the proceeding (in this case the applicant) to satisfy the Court that the costs should not be paid by her. The principles and factors that the authorities outline on these, and other similar rules in other jurisdictions, have been collected and summarised by Hallen AsJ (as he then was) in Johnson & Anor v Clancy & Anor. My summary of them is as follows:
(a)The rule does not give rise to a presumption that costs will be ordered against the discontinuing party;
(b)However, the rule does create a starting position for the plaintiff or discontinuing party to pay the defendant’s costs, subject to a contrary order;
(c)The contrary order itself involves a discretionary decision to be exercised judicially. If there is to be a departure from the starting position, it should be done in a particularised, and principled way. The Court is required to make such order as it thinks just in the particular circumstances of the case;
(d)The burden is on the party who seeks to persuade the Court that a contrary order should be made. If facts are to be relied upon to found the Court making a different order, the plaintiff will bear the onus of proving the relevant facts;
(e)All the relevant circumstances, and not just the fact of discontinuance, should be considered. This may include a consideration of the whole of the proceedings. Generally the discretion will be exercised on the basis of the objective circumstances established on the evidence and not involve the subjective considerations of one party;
(f)A relevant consideration is whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them. It might also be appropriate for the Court to consider the conduct of the defendant prior to the commencement of the proceedings where such conduct may have precipitated the litigation;
(g)Generally there must be some proper justification, sound positive ground, or a good reason, for departing from the staring position. The reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs, so for example, it may be appropriate to make a contrary order:
(i)Where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff’s control;
(ii)Where the plaintiff achieved practical success in the proceedings;
(iii)Where costs have been significantly increased by the unreasonable conduct of the defendant;
(h)Where the proceedings are discontinued prior to any hearing on the merits, usually it will be impracticable to assess the eventual prospects of success in the action and the Court cannot try a hypothetical action between the parties to determine the question of costs;
(i)There is a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs; and
(j)Where the proceedings are discontinued after interlocutory relief has been granted, the Court may take into account the fact that that interlocutory relief has been granted.[7]
I approach the exercise of the discretion conferred by r 63.15 in accordance with the principles set out above.
[7]Ibid [12].
The plaintiff submits that an order that each party bear their own costs is appropriate in circumstances where:
(a) It was reasonable for the plaintiff to commence the proceeding, particularly in light of earlier cases with substantially similar facts which had successfully pursued the same approach;
(b) The plaintiff achieved practical success, with the expedited review decision resulting in the same substantive outcome as would have occurred if the plaintiff had been successful in its application for judicial review;
(c) There were good reasons for the discontinuance as the review decision rendered the proceeding unnecessary; and
(d) The plaintiff acted reasonably in both agreeing to and meeting the timetable leading to the review decision, and in discontinuing the proceeding upon receipt of the review decision.
Absent a full hearing, it is not possible to conclude that the plaintiff acted reasonably in commencing the proceeding. The plaintiff submitted that the delegate’s decision of 3 April 2019 was made in circumstances which denied the plaintiff procedural fairness. It submitted that the minimum content of the obligation to afford the plaintiff procedural fairness ‘was to notify the Plaintiff of the critical issues on which the decision was likely to turn so that the Plaintiff may have an opportunity of dealing with them.’[8]
[8]Plaintiff, ’Outline of Submissions’, 29 April 2019, [18.4].
At the outset of the proceeding on 2 May 2019, I pointed out to Ms Martin, who appeared on behalf of the plaintiff:
The problem you’ve got, Ms Martin, is that the decision which was made on the face of the legislative scheme, I think you have the job ahead of you to persuade me that that regime requires procedural fairness to be accorded to you. Whereas the internal review process may well be in a different category.[9]
[9]Transcript of proceeding (2 May 2019) 4.15–4.20.
It is neither necessary nor appropriate to express any concluded view as to whether, in making a decision pursuant to s 28 of the National Law to immediately suspend the plaintiff’s provider approval on the grounds of an immediate risk to the safety, health or wellbeing of children, the delegate was required to accord the plaintiff procedural fairness. However, as s 28 expressly excludes any requirement to give a provider a show cause notice, it is certainly arguable that there was no such obligation upon the delegate. Rather, the obligation to provide procedural fairness arose at the internal review stage of the decision-making process.
The discontinuance of the proceeding does not arise because of any unexpected intervening event. On 17 April 2019, the plaintiff requested an internal review of the delegate’s decision. Pursuant to s 191(5) of the National Law, the review had to be conducted within 30 days, unless extended for a further 30 days because of a request for further information. Upon a request being made for a review, it was inevitable that the decision of 3 April 2019 would be supplanted by the review decision.
The plaintiff submits that it was reasonable to commence a proceeding, particularly in light of earlier cases with substantially similar facts which had pursued the same approach (an application for a stay of a suspension order). In support of this submission, the plaintiff referred to three Federal Court judgments:
·Galaxy Day Care Pty Ltd v Secretary, Department of Education and Training;[10]
·Azaria Family Day Care Pty Ltd v Secretary, Department of Education and Training;[11] and
·Al–Huda Pty Ltd v Secretary, Department of Education and Training.[12]
[10][2018] FCA 1549.
[11][2018] FCA 1640.
[12][2018] FCA 1668.
None of these cases involved consideration of the National Law. The decisions challenged in these proceedings in the Federal Court did not involve an immediate suspension based upon an immediate risk to the safety, health or wellbeing of children. This is a significant point of distinction. Considerations relating to the safety and welfare of children would have weighed heavily in determining whether, notwithstanding the financial impact of the suspension on the plaintiff, the balance of convenience favoured the continuation of the suspension pending the internal review decision. I reject the plaintiff’s submission that ‘[i]n very many respects, the circumstances of Galaxy; Azaria and Al–Huda were on “all fours” with the facts of the present proceedings.’[13]
[13]Plaintiff, ‘Submissions’, 12 June 2019, [31].
I do not accept the plaintiff’s contention that it has achieved practical success in the current proceeding. The plaintiff sought final orders quashing the decision of 3 April 2019 and interim orders staying the decision. It obtained neither. The decision continued in operation until replaced by the internal review decision of 14 May 2019. That decision confirmed the original decision.
Absent a full hearing, I am not able to conclude that the plaintiff acted reasonably in commencing the proceeding. However, I am able to conclude that the plaintiff’s application for an internal review meant that it was highly likely that the decision of 3 April 2019 would be supplanted by a later decision. As such, it was likely that, when the proceeding was commenced on 17 April 2019, the original decision would be rendered inutile prior to the hearing of the plaintiff’s claim for final relief.
The plaintiff shall be ordered to pay the defendant’s costs on a standard basis, to be taxed in default of agreement. Those costs include the defendant’s costs up to 6 June 2019, the date of discontinuance, as well as additional costs incurred after that date.
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