Kontea Pty Ltd and Tertiary Education Quality and Standards Agency (Practice and procedure)
[2024] ARTA 803
•25 October 2024
Kontea Pty Ltd and Tertiary Education Quality and Standards Agency (Practice and procedure) [2024] ARTA 803 (25 October 2024)
Decision and Reasons for Decision
Applicant: Kontea Pty Ltd
Respondent: Tertiary Education Quality and Standards Agency Tribunal Number: 2024/6679
Tribunal: General Member K Thornton
Place: Melbourne
Date: 25 October 2024
Date of written reasons: 4 November 2024
Decision: The stay application made by Kontea Pty Ltd is refused.
The Tribunal vacates the interim stay order granted by the Tribunal on 25 September 2024.
.......................[SGD]................................................
General Member K Thornton
CATCHWORDS
PRACTICE AND PROCEDURE – application to stay decision of Tertiary Education Quality and Standards Agency – decision to suspend registration – prospects of success – consequences for Applicant – public interest – consequences for Respondent – whether review would be nugatory – other matters – application for recusal refused – stay application refused
LEGISLATION
Administrative Review Tribunal Act 2024 (Cth)
Tertiary Education Quality and Standards Agency Act 2011 (Cth) Education Services for Overseas Students Act 2000 (Cth) Administrative Appeals Tribunal Act 1975 (Cth)
CASES
Isbester v Knox City Council (2015) 255 CLR 135
Scott and Australian Securities and Investments Commission [2009] AATA 798 Menzies Institute of Technology and Australian Skills Quality Authority [2019] AATA 343
Construction Industry Training Australia Pty Ltd and Australian Skills Quality Authority [2019] AATA 2219
Gurkhas Institute of Technology Pty Ltd trading as Royal Gurkhas Institute of Technology and Australian Skills Quality Authority [2017] AATA 1018Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047
Statement of Reasons
On 14 October 2024, the Administrative Appeals Tribunal (‘AAT’) became the Administrative Review Tribunal (‘the Tribunal’). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act
gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
Kontea Pty Ltd (‘the Applicant') operates under the name Australian Industrial Systems Institute. Prior to the decisions referred to paragraph 3 below, the Applicant was registered under the Tertiary Education Quality and Standards Agency Act 2011 (Cth) (‘the TEQSA Act’) as a higher education provider. The Applicant also held an accreditation under the TEQSA Act in respect of its Bachelor of Construction Management (Honours) course and was registered under the Education Services for Overseas Students Act 2000 (Cth) (‘the ESOS Act’) as a provider in respect of its Bachelor of Construction Management (Honours) course.
On 29 August 2024, certain decisions were made by the Respondent in respect of the Applicant.
The relevant decisions were as follows:
(a)Suspend the Applicant’s registration as registered provider under s 83(3)(b) of the ESOS Act;
(b)Extend the Applicant’s registration as a registered higher education provider until 31 December 2024 under s 37A of the TEQSA Act; and
(c)Extend the Applicant’s accreditation for its Bachelor of Construction Management (Honours) course until 31 December 2024 under s 57A of the TEQSA Act.
The decision referred to in sub-paragraph (a) above was made in circumstances where the Respondent alleged that the Applicant had breached s 29 of the ESOS Act. Pursuant to ss 28 and 29 of the ESOS Act, a registered provider must maintain a bank account (also referred to as a ‘protected account’) and must pay any pre-paid tuition fees into that account. Further a registered provider must ensure that, at all times, there is a sufficient amount in the protected account to repay all tuition fees to every overseas student or intending overseas student.
The decisions referred to in sub-paragraph (b) and (c) were made in circumstances where the Applicant’s accreditation and registration under the TEQSA Act would have expired on
3 and 4 September 2024 respectively. Although the Applicant applied to renew its accreditation and registration, those applications were invalid because the Applicant failed to pay the required application fees.
The Applicant was notified of the relevant decisions on 29 August 2024.1 The decision to suspend the Applicant’s registration under the ESOS Act took effect immediately. However as mentioned above, the Respondent granted an extension to the Applicant’s TEQSA Act registration, and its course accreditation in respect of the Bachelor of Construction Management (Honours) course until 31 December 2024 in order to allow it to continue teaching its current students until the end of the semester. The decision letter of the Respondent dated 29 August 2024 states that the reason for this extension is ‘…to limit the disadvantage to Kontea’s current students and allow time for Kontea to assist them in transitioning to new providers.’2
On 9 September 2024, the Applicant applied to the former Administrative Appeals Tribunal (AAT) for review of the suspension decision by TEQSA. On 29 August 2024, the Applicant sought a stay of this decision pursuant to s 41 of the Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’).
On 25 September 2024, the AAT ordered an interim stay of each of the Respondent’s decisions referred to in paragraph 3 above. That interim stay was subject to a condition that the Applicant must not enrol, or cause to be enrolled, any new students in any of its courses until the formal determination of the Stay Application or until further order by the Tribunal. The condition was expressed as not applying to the re-enrolment of current students. The stay application was listed for hearing on 25 October 2024. The interim stay order was due to expire at 5pm on this date.
It has been brought to the Tribunal’s attention at the hearing of the matter by way of oral submissions that the interim stay order granted on 25 September 2024 is deficient in two respects. Firstly, the Tribunal referred to the decision to suspend the Applicant’s registration the National Vocational Education and Training Regulator Act 2011 (Cth). Clearly this is an
1 T69, 846-7. In this regard, references to “T” documents are references to documents required to be given to the Applicant under s 23 of the Administrative Reviews Tribunal Act 2024 (Cth).
2 Ibid.
error. The Respondent sought suspension of the Applicant’s registration under the ESOS Act. The Tribunal confirms that the effect of Order 1a of the interim Orders made on 25 September 2024 was to stay, on an interim basis, the decision of the Respondent made on 29 August 2024 to suspend the Applicant’s registration under the Education Services for Overseas Students Act 2000 (Cth). The second deficiency was in relation to the Orders made at paragraph 1b of the Interim Order which was made erroneously as the Applicant did not apply for a stay of those decisions.
In relation to the substantive stay application heard before the Tribunal today, the Tribunal has determined to not grant the stay application. The Tribunal therefore orders that the Interim Orders made on 25 September 2024 (however erroneous) are vacated. This Order is directed to take effect from 25 September 2024.
STAY APPLICATION
The stay application was heard by this Tribunal on 25 October 2024. The Applicant was represented by Mr Ian Hone, solicitor, and the Respondent was represented by Mr Mark Hosking of counsel. At the commencement of proceedings, the Applicant made an oral application that I should recuse myself from hearing the interim stay application in this matter because I had previously heard and determined a stay application brought by the Applicant in the related matter of Kontea Pty Ltd and Australian Skills Quality Authority on 23 October 2024. That application involved largely the same facts as the present application but concerned decisions made by a different agency. The Applicant submitted that because I had decided that matter against the Applicant, I would be unable to bring an impartial mind to my consideration of this matter. The Respondent opposed the recusal application and submitted to the Tribunal that the Applicant was unable to point to any specifics in relation to the allegation of bias and relied upon the relevant principles as set out in Isbester v Knox City Council (2015) 255 CLR 135. I adjourned briefly to consider the application. Upon resuming, I determined that because the Applicant was unable to articulate any matter which underpinned the apprehension of bias, nor was able to articulate a logical connection between the matter and a feared deviation of deciding the case on its merits the application for recusal was refused. The Tribunal then proceeded to hear the stay application.
In regard to the stay application, the Applicant relied on the following:
(a)Affidavit of Argyro (Roula) Tsiolas (‘the first Tsiolas affidavit’) sworn on 7 October 2024. The affidavit also contained a single annexure being a letter from Syncorana Pty Ltd to the Applicant dated 20 September 2024. That letter included the subject line ‘Investment in Australian Industrial Systems Institute (AISI)’,
(b)Affidavit of Argyro (Roula) Tsiolas (‘the second Tsiolas affidavit’) sworn on 24 October 2024. The affidavit annexed to it a letter from Mr Steven Metter, Principal, Combined Accounting & Taxation Services dated 22 October 2024; and the same letter from Syncorana Pty Ltd as attached to the first Tsiolas affidavit;
(c)Applicant’s Submissions on Stay Application dated 24 October 2024.
The Respondent relied upon the following materials:
(a)Respondent’s Submissions on Stay Application dated 18 October 2024;
(b)T-documents lodged 18 October 2024 totalling 870 pages;
(c)Bundle of Authorities which contains the relevant legislation and a number of authorities upon which the Respondent relies.
At the hearing of the application, both parties supplemented their written submissions with oral submissions.
LEGISLATIVE FRAMEWORK
The powers of the Administrative Review Tribunal to stay a reviewable decision are contained in s 32 of the Administrative Review Tribunal Act 2024 (Cth) (‘ART Act’). The relevant provisions provide:
32 Reviewable decision continues to operate unless Tribunal orders otherwise
General rule
(1) The making of an application to the Tribunal for review of a reviewable decision does not affect the operation of the decision or prevent the taking of action to implement the decision.
Exception – Tribunal may stay operation or implementation
(2) However, on application by a party to a proceeding for review of a reviewable decision, the Tribunal may make an order staying or otherwise affecting the operation or implementation of the decision if the Tribunal
considers that it is desirable to do so for the purpose of ensuring the effectiveness of the review.
That power is expressed in similar terms to s 41 of the former AAT Act, which provided that:
41 Operation and implementation of a decision that is subject to review
(1) Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.
(2) The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
In relation to the powers under s 32 of the ART Act, the Explanatory Memorandum provides that these provisions are ‘equivalent to section 41 of the AAT Act.’ Therefore, it is instructive to have regard to the authorities concerning the former s 41 of the AAT Act.
In determining whether to make an order staying or otherwise affecting the operation or implementation of a decision, the Tribunal needs to consider whether it is ‘desirable to do so for the purpose of ensuring the effectiveness of the review.’
CONSIDERATION
The relevant considerations are set out by former President Downes J in Scott and Australian Securities and Investments Commission [2009] AATA 798 (‘Scott’) at [4]:
1The prospects of success.
2The consequences for the applicant of the refusal of the stay.
3The public interest.
4The consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not.
5Whether the application for review would be rendered nugatory if a stay were not granted.
6Other matters that are relevant, amongst which I would include the length of the time that the ban has already been in place and the gap between today and the hearing of the application.
These considerations have been consistently applied in stay applications before the former AAT.3 Applying the considerations in Scott to the current application, the Tribunal makes the following observations:
Prospects of success
As has been held in previous decisions of the former AAT:
‘…it is not the role of the Tribunal, in assessing the merits of a stay application under section 41(2), to conduct a preliminary hearing (or sometimes referred to “a mini trial”) of the evidence and issues to be raised subsequently at a final hearing, when evaluating an applicant’s prospect of success. The task of the Tribunal in such an application is to consider whether there exists facts and circumstances which would provide some basis for success.’4
The Respondent submits that the Applicant ‘has poor prospects of success in the underlying application for review.’5 The Respondent notes the Applicant does not dispute that it breached s 29 of the ESOS Act. The suspension power under s 83 of the ESOS Act is enlivened when a provider has breached a provision of the ESOS Act. The Respondent submits that any efforts made by the Applicant to rectify its position in regard to the protected account through potential investments are entirely speculative. The Respondent submits that even if the position were to improve, and the Respondent’s powers were properly engaged in circumstances in light of the clear breach of s 29 of the ESOS Act.
The Applicant on the other hand describes the prospects of success on the substantive application as ‘robust.’6 The Applicant relies, amongst other matters, on its well-established infrastructure and reputation as an educational provider over its 18 years in the industry.
Whilst I am unable conduct a full review of the evidence and issues to be raised subsequently at the final hearing, I am obliged to make an assessment based on the evidence before me. It is on this basis that I find the Applicant’s application for review in the substantive matter has poor prospects of success given its breach of s 29 of the ESOS Act
3 See eg, Menzies Institute of Technology and Australian Skills Quality Authority [2019] AATA 343; Construction Industry Training Australia Pty Ltd and Australian Skills Quality Authority [2019] AATA 2219; Gurkhas Institute of Technology Pty Ltd trading as Royal Gurkhas Institute of Technology and Australian Skills Quality Authority [2017] AATA 1018.
4 Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047, [68].
5 Respondent’s Submissions on Stay Application [35].
6 Applicant’s Submissions [D.1].
which has been conceded by the Applicant in its submission to the Respondent on 21 August 2024.
Therefore, in relation to this consideration, the Tribunal considers the Applicant’s prospects of success on the substantive application are poor, and therefore finds that this consideration weighs heavily against the Applicant in determining whether it is desirable to grant a stay.
Consequences for the Applicant of the refusal of the stay
Ms Tsiolas contends that the ‘cancellation by TEQSA will result in the departure of the investor which will prove detrimental to Kontea moving forward to continue to provide quality education to so many students. This has been something that Kontea has been working very hard to achieve, throughout and despite its difficult time as presented above, and to lose this opportunity would be catastrophic on many fronts.’7
In relation to the Applicant’s financial position, Ms Tsiolas contends that Kontea is ‘in the process of rectifying its position with the protected account through capital injection by an investor.’8 Ms Tsiolas has provided a letter from the Founder and Managing Director of Syncorana Pty Ltd regarding this potential investment.9 The letter states ‘[i]n close collaboration with several of our Indigenous partners we are developing a range of customised programs for Indigenous Australians. These innovative programs will be game changing and designed to help close the gap in a number of critical areas.’
The Respondent contends that the ART should give ‘limited weight’ to the Applicant’s contention that Syncorana Pty Ltd may be unwilling to invest in the Applicant if no stay is granted.10 The Respondent maintains that an analysis of the bank statements demonstrate that the Applicant has had serious shortfalls in maintaining the protected amount since at least January 2022.
7 First Tsiolas affidavit [28].
8 First Tsiolas affidavit [27].
9 As annexed to the first and second Tsiolas affidavits.
10 Respondent’s submissions [52].
The Respondent submits this is particularly so when it is ‘entirely speculative’ whether the Syncorana will invest in the Applicant even if a stay is granted.
The consequences for the Applicant if the stay application were refused would be significant on two fronts. Firstly, in relation to the current student body and proposed enrolments of international students and secondly, in relation to the potential investment. To this later point, the Applicant relies upon a letter authored by Mr Stephen Metter, Principal, Combined Accounting & Taxation Services’ dated 22 October 2024. The letter states ‘For the record, we have been working with you (and others) in relation to AISI for the past 5 weeks. We have gathered and analysed data, have digested the draft figures for the year ended 30 June 2024 and reviewed your cash flow projections. We are also well-informed regarding your position with the Regulators, and the reasons behind this position.’ The letter goes on ‘We are able to confirm that we have a number of parties interested in investing in AISI, all of whom have access to the quantum of money we have discussed, which is circa $1.3m, as a sort-of ‘bridging’ finance, and then additional funds once the AISI runway is clearer.’
The Applicant relies upon this correspondence and the correspondence annexed to the first and second Tsiolas affidavits as evidence of potential investment in the Applicant. The evidence suggests that the Applicant has been in financial difficulty since at least January 2022 when it was unable to meet its legislative obligations with regards to the protected account. The Applicant submits that if the Tribunal does not grant the Applicant’s request for a stay the consequences would be disastrous for the Applicant, its current and former students, and the Institute. The Applicant also submits that not granting a stay has the potential to deter future investment by potential investors.
On the balance the Tribunal is of the view that this consideration should be given limited weight given the duration of the Applicant’s serious financial issues which have existed since at least January 2022. The investment of funds into the Applicant is no doubt vital to it continue to maintain its operations. Of course, not granting a stay and revoking the current stay order would not preclude investment by these potential investors in the Applicant. Again, whether the investors chose to invest, is, on the current state of the evidence, speculative. As such the Tribunal gives this consideration limited weight.
The public interest and the interests of persons affected by the decision
The Tribunal has already referred to the interests of persons that would be affected by the decision. The Respondent has submitted that the relevant interests are to be identified by reference to the statutory scheme under which the decisions were made. The Tribunal has had regard to the objectives of each of the statutory schemes as set out in the TEQSA Act and the ESOS Act.
The Respondent has submitted that the Tribunal ought to give significant weight to the public interest in this case. The Respondent submits that ‘[g]iven the applicant’s serious breaches of s 29 of the ESOS Act, its failure to pay refunds as required under the ESOS Act, and the lack of any specific and compelling evidence of how the applicant intends to improve its financial position, the public interest here favours dismissing the application for a stay and allowing the suspension of the applicant’s registration to take effect.’11
In the alternative whilst the Applicant accepts that the statutory objectives are important, the Applicant has also submitted that the public interest would be served by having training organisations such as the Applicant available to provide its courses to its current and prospective students.
I have weighed the public interest and the interests of persons affected by the decision. The Tribunal finds that the public interest as set out in the relevant legislation and the circumstances outlined by the Respondent in relation to Australia’s reputation and standing should be afforded significant weight.
The consequences for the Respondent’s functions
The Respondent did not contend that the outcome of the stay application has any particular consequences for the Respondents functions. The Applicant has submitted that there would be consequences for the Respondent, in that, if the Applicant were not granted a stay, there would be strain on other educational providers who offer courses in similar fields to those of the Applicant.
11 Respondent’s submissions [52].
Weighing the factors as I am best able to, I am not persuaded by the arguments of the Applicant in this respect. As such I give this consideration neutral weight.
Whether the application for review would be rendered nugatory
The Applicant contends that the application for review may well be rendered nugatory as an unfavourable decision would result in irreversible damage, potentially to the extent that the Applicant would be unable to trade.
I have considered all of the relevant factors in order to determine whether it is desirable to make a stay application for the purpose of ensuring the effectiveness of the review. I do not consider that the failure of the Tribunal to impose a stay would render the substantive application nugatory, particularly in light of the Applicant’s concession in regard to its failure to comply with s 29 of the ESOS Act.
Accordingly, the Tribunal gives this consideration little weight given the other factors referred to above.
The length of time that the reviewable decision has been in place and the gap between the day of the application and the day of the hearing of the application
Both parties agree that an expedited hearing would serve both parties interests. The Tribunal notes however that even if the hearing were to be expedited, the Tribunal cannot guarantee that the hearing will take place before the end of this year. This shouldn’t be a disadvantage visited upon the Applicant, but I have considered this factor in determining whether or not to grant the Applicant’s request for a stay.
CONCLUSION
Weighing up the different considerations and following a review of the evidence and submissions, it is the Order of this Tribunal that the stay application is refused. This Order is directed to take effect from 25 September 2024. The Tribunal interim orders made on 25 September 2024 are vacated.
I further direct both parties provide to the Tribunal within two weeks of today’s date, a timetable for filing of relevant material, and the availability of counsel for a hearing in January to March of 2025.
I certify that the preceding 45 (forty - five) paragraphs are a true copy of the reasons for the decision herein of General Member K Thornton
.................................[SGD].....................................
Associate
Dated: 4 November 2024
Dateof hearing: 25 October 2024 Datefinalsubmissionsreceived:
24 October 2024
SolicitorsfortheApplicant:
Hone Legal
CounselfortheRespondent:
Mark Hosking
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