Masters in Building Training Pty Ltd v State of New South Wales

[2022] NSWSC 499

Supreme Court

New South Wales

Medium Neutral Citation:

Masters in Building Training Pty Ltd v State of New South Wales [2022] NSWSC 499

Hearing dates:

26 – 28 October 2021; 1 November 2021

Date of orders:

29 April 2022

Decision date:

29 April 2022

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Order that the defendant pay the plaintiff the amount of $1,443,078.27.

2.   Subject to any submissions on costs, order that the defendant pay the plaintiff’s costs.

Catchwords:

CONTRACTS — Breach of contract — Remedies — Debt — Where plaintiff provided vocational education training and obtained funding under a contract with the Department of Education to provide such training — Where plaintiff had various reporting obligations to the Department in order to qualify for funding — Where students were required to “participate” in training, rather than merely access such training — Where defendant terminated the contract following alleged Events of Default — Whether plaintiff entitled to recover money owing under contract as debt — Whether defendant entitled to set off overpayments made to the plaintiff against debt owed to the plaintiff

Legislation Cited:

Government Information (Public Access) Act 2009 (NSW)

National Vocational Education and Training Regulator Act 2011 (Cth)

Standards for Registered Training Organisations (RTOs) 2015 (Cth)

Cases Cited:

Al Jadeed TV v United Broadcasting International Pty Ltd (2011) 283 ALR 205; [2011] FCA 983

Becker Group Ltd v Motion Picture Company of Australia [2004] FCA 630

Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494; [2008] FCAFC 38

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Burger King Corporation v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187

Butt v McDonald (1896) 7 QLJ 68

Carr v JA Berriman Pty Ltd (1953) 89 CLR 327; [1953] HCA 31

Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Coshott v Sakic (1998) 44 NSWLR 667

Currie v Dempsey (1967) 69 SR (NSW) 116; [1967] 2 NSWR 532

Dasreef Pty Ltd v Hawchae (2011) 243 CLR 588; [2011] HCA 21

Duffy Bros Fruit Market (Campbelltown) Pty Ltd v Gumland Property Holdings Pty Ltd [2007] NSWCA 7

Eriksson v Whalley [1971] 1 NSWLR 397

Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228

FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340

Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50

Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305

Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749

Masters in Building Training Pty Limited v State of New South Wales (No 2) [2021] NSWSC 747

Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234

Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21

Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9

Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15

Zhu v Treasurer of New South Wales (2004) 218 CLR 530; [2004] HCA 56

Texts Cited:

Carter and Peden “Good Faith in Australian Contract Law” (2003) 19(2) Journal of Contract Law 2, 169

Carter, Breach of Contract (2nd ed, 1991, Law Book Company)

Phipson, Phipson on Evidence (14th ed, 1990, Sweet & Maxwell)

Robert McDougall ‘The Implied Duty of Good Faith in Australian Contract Law’ (Speech, 9 March 2006)

Seddon, Cheshire & Fifoot Law of Contract (11th ed, 2017, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

Masters in Building Training Pty Ltd (Plaintiff)
State of New South Wales (Defendant)

Representation:

Counsel:
D Lloyd SC, CP O’Neill and K Beattie (Plaintiff)
N Simpson (Defendant)

Solicitors:
VTS Lawyers (Plaintiff)
Sparke Helmore Lawyers (Defendant)

File Number(s):

2021/90347

Publication restriction:

Nil

Judgment

1. HER HONOUR: This matter involves a dispute between the plaintiff, Masters in Building Training Pty Ltd (MIBT), a nationally registered training organisation (RTO) that at the relevant time provided online and workplace-based training to students in New South Wales, Queensland and the Australian Capital Territory, on the one hand, and the defendant, the State of New South Wales, on the other hand.

2. The dispute arose in relation to the termination by the NSW Department of Education (Department) in March 2021 of the contractual arrangements pursuant to which MIBT obtained funds from the Department for the provision of training to students in New South Wales. The contractual arrangements (which were renewable on an annual basis) were due to expire in any event at the end of June 2021 and it would presumably have been open to the Department simply not to renew those contractual arrangements. However, the Department chose to proceed with an earlier termination of the contractual arrangements, which precipitated an urgent interlocutory application (as I will explain in due course) for an injunction in effect to compel the continuation of those arrangements pending determination of the issue as to the validity of the termination (and hence to extend the time during which training was provided under the then existing arrangements).

3. The hearing of the proceeding was expedited but ultimately (and after at least one further application for interlocutory relief to which I will refer shortly) what now remains to be determined would not in my opinion have merited expedition over and above any other commercial dispute that comes before this Court in the ordinary course. That is because the issue that warranted expedition related to the continued provision of training by MIBT until 30 June 2021. After that date, the substantive dispute relates to liability for payment of amounts due under the contractual arrangements, including any set-off in respect of those amounts by reference to other amounts payable to the Department; and the quantum of those amounts – matters the determination of which (even though the amount in question is not small) did not appear to me to warrant any special need for expedition (and hence delivery of judgment was not prioritised over other matters in the list).

4. At least as originally framed, the disputes between the parties related to MIBT’s contentions that the Department’s Notice of Termination dated 25 March 2021 was invalid and of no effect and that the Department had breached its contract with MIBT by its failure to pay all fees due to it (for which MIBT sought damages and equitable compensation, together with interest and costs), on the one hand, and, on the other hand, to the Department’s contentions (raised by its cross-claim) that it was entitled to withhold payment of “Subsidies” and “Loadings” otherwise payable to MIBT for various periods between 13 July 2020 and 30 June 2021 and that it was entitled to damages totalling $925,429.99 (plus interest and costs).

5. However, it became apparent during submissions in the course of the hearing that the only relevance (or potential relevance) of the question as to whether the Department’s Notice of Termination had been validly issued was as to any claim that might be made on the usual undertaking as to damages that had been proffered by MIBT in relation to the mandatory injunction sought and obtained by it at the start of the proceeding. This is because MIBT does not now press any claim for damages in relation to the termination; rather, it simply seeks payment of moneys (Subsidies and Loadings) to which it says it is contractually entitled having performed the services it did in relation to the training of students enrolled in its courses or “qualifications”. Thus, in essence, MIBT’s claim is based in debt (as in essence is also the Department’s cross-claim although framed as including a claim for damages for breach of contract).

6. Further, it appears that MIBT and the Department were at cross-purposes as to the basis on which the Department maintained it was entitled, after termination of the Contract, not to pay the claimed Subsidies and Loadings. The Department in its submissions devoted space to the contention that it was entitled in the relevant period up to 30 June 2021 to withhold the Subsidies and Loadings (i.e., while the suspension notices were in force) but made clear at the hearing that it does not contend that it has or had an unfettered discretion to reject what is referred to as Training Activity Data (on which the claim for payment is based) nor does it contend that the fact of termination of itself entitles it to withhold payment of the claimed amounts. Thus, the Department appears to accept that, after the termination of the contractual arrangements, its hitherto entitlement to suspend payment of Subsidies and Loadings (i.e., its entitlement to do so while there was a formal suspension in place) does not continue to operate. Rather, what the Department contends is that it has no liability now to pay moneys referable to Training Activity Data that it was entitled to reject or which was not uploaded within the time the Department had specified (and that this is the case even if MIBT might have documents establishing the underlying accuracy of that Training Activity Data). In those circumstances, and since no claim for damages for breach of the alleged implied term of good faith is pressed (the claim by MIBT in essence being for amounts it claims are owing under the now terminated contract), much of the debate in the submissions as to the ability to withhold the Subsidies and Loadings during the period of the suspension notice is now otiose.

7. Thus, the fundamental issues in dispute at the hearing ultimately related to liability for, and the quantum of, any amount now payable to MIBT for services provided during the course of the Contract up to 30 June 2019 as well as in respect of the offsetting payments claimed by the Department. Those issues were not uncomplicated having regard to the mechanism by which claims for payments for services provided under the Contract are made through uploading of data through a particular software or online Portal operated by the Department and the data clarification or verification process that then occurs through the Department’s software program and/or by human review (see the explanations in the affidavit of Linna Nguon, affirmed 6 October 2021 at [13]-[37]) and the (unpleaded) complaint by the Department in effect as to the quality or content of the training that was provided and record keeping related thereto (which turned in large part on the definition of “Participation in Subsidised Training” as I explain in due course).

8. Regrettably, it seems difficult not to conclude that at the heart of the disputes between the parties is a mismatch of expectation or understanding as to what was required to be provided by MIBT in order to address the Department’s queries in the course of its clarification or verification process, exacerbated by the view formed by the Department (seemingly, after the event or at least not expressed until then) as to the quality or otherwise of the training provided by MIBT (and, in particular, what was expected for satisfaction and reporting of the requirement for student “Participation in Subsidised Training”). This points at the very least to the desirability of amendment of the Department’s standard form contract to make clear exactly what it requires in terms of the content and delivery of training.

9. MIBT’s contention is that it performed its contractual obligations until the expiry of the contract on 30 June 2021 and MIBT complains that, despite the Court’s orders in the interlocutory decisions to which I will refer shortly (Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454 (MIBT No 1) per Kunc J and Masters in Building Training Pty Limited v State of New South Wales (No 2) [2021] NSWSC 747 (MIBT No 2) per Parker J), the Department has made no payment to it after 1 March 2021.

Summary

10. The question as to validity of the Notice of Termination turns on whether there was an extant Event of Default as at 25 March 2021 on which the Department could rely to exercise the power of termination under cl 21.2(c) of the Contract. Although MIBT might well have a legitimate complaint as to the invocation by the Department of the more summary procedure for termination after, and before completion of, the process first invoked by it (i.e., what might be described as akin to a show cause procedure under which notification of, and an opportunity to remedy, identified or perceived Events of Default was provided to MIBT), nothing here turns on this because, as adverted to above, MIBT does not press its claim for recovery of damages or equitable compensation (see, for example, at T 256; T 289.9-39) nor does the Department contend that a valid termination precludes recovery by MIBT of moneys otherwise due under the Contract.

11. The Termination Notice in effect incorporated the matters referred to in the December 2019 Suspension Notice and the 4 March 2021 letter (see below). Of those matters, in its submissions the Department relies on four Events of Default that it contends found the basis for valid termination of the Contract: first, that MIBT did not provide evidence to the Department of the reassessment of former students of a particular trainer; second, that MIBT did not provide sufficient or complete evidence in relation to the records of Recognition of Prior Learning for the Advanced Diploma of Building and Construction; third, the determinations by the Australian Skills and Quality Authority (ASQA) that MIBT was non-compliant with the relevant standards for RTOs; and, fourth, the making of allegations in the 4 March 2021 letter of lack of engagement with students and lack of face to face training. The Department maintains that it is sufficient that it held a belief as to those matters at the relevant time in order to exercise the right of termination.

12. Of those four identified Events of Default, I have concluded that at least the third was an extant Event of Default at the time of the 25 March 2021 Termination Notice and hence that there was valid termination under cl 21.2(c) of the Contract (notwithstanding that the process earlier invoked under cl 21.2(d) had not by then been completed).

13. As to the Department’s cross-claim, as noted above, I accept that the Department was entitled to withhold Subsidies and Loadings while the relevant suspension notices were in force (although I see no utility in the making of a declaration to that effect). However, I have concluded that, following termination of the Contract, the Department is liable to pay various of the claimed amounts for Subsidies and Loadings (as I set out in due course) to MIBT, although I consider that there should be a set-off against that amount for the moneys that have been conceded to be payable to the Department and the further amounts that I find have been established as payable to the Department; and I will make orders accordingly.

14. As to the complaint made by the Department’s internal and external reviewers as to the content of the “Subsidised Training” or the manner in which it is conducted (particularly, the complaint as to lack of interaction and participation and that it is said to be “gap training”; and the Department’s belief that the training has in some fashion been abdicated to the employers of enrolled students), apart from the fact that this issue is not pleaded, on balance I do not accept that this criticism is made good (although it may have force in relation to individual students from time to time – a matter that it is neither practical nor necessary for me to test on a student-by-student basis by delving into the voluminous court books). I also do not accept that (although it was certainly open to the Department to issue directions with which MIBT under the Contract was obliged to apply) it was open to the Department in effect arbitrarily to set an end time for the uploading of Training Activity Data to its “Portal” and then to deny any claims supported by data that might otherwise have been available (and hence to refuse payment on that basis).

15. As to the question of costs, I will ascertain at the time of publication of these reasons whether the parties seek the opportunity to provide brief written submissions as to costs but otherwise I would follow the general rule that costs should follow the event and that, MIBT having predominantly been successful in its contentions, the Department should pay MIBT’s costs.

Chronology of Events

Smart and Skilled program

16. On 1 January 2015, the New South Wales Government implemented reforms to the Vocational Education and Training (VET) sector in New South Wales, resulting in the “Smart and Skilled” program, which is designed to subsidise training for students to complete VET for Certificate II level up to Advanced Diploma Level, including the level of Certificate III, in a variety of “competencies”.

17. Under the Smart and Skilled program, students are given the opportunity to select an RTO through which their training is undertaken. RTOs are required to be registered pursuant to the National Vocational Education and Training Regulator Act 2011 (Cth) (NVETR Act). The Australian Skills and Quality Authority is the regulatory authority for all RTOs, save for those in Western Australia and Victoria.

18. There are approximately 391 RTOs delivering training under the Smart and Skilled program in New South Wales. The relationship between those RTOs and the Department of Education (the Department) is governed by the terms of the (standard form) Smart and Skilled Contract Terms and Conditions (Contract) (see below). The relevant body within the Department that administers the Smart and Skilled program is Training Services New South Wales.

Contract between the Department and MIBT

19. The Department and MIBT have been parties to contractual arrangements in terms of the Contract since around 2015 (each Contract being for a term of twelve months and renewed on a yearly basis by the Department). The last such agreement was entered into between MIBT and the Department on or about 15 May 2020, effective from 1 July 2020 (and it was thus due to expire on 30 June 2021). The renewal process involves the Department issuing a Review Notice two months prior to the end of the “Activity Period” (defined to mean the period specified in the Approved Qualifications Activity Schedule), setting out the skills which may be provided by the RTO. If accepted, this brings into existence a new contract from 1 July of the relevant year. If no Review Notice is issued, then the then existing contract expires on 30 June of the relevant year (see the explanation given at T 2.29-45; and see cl 6 of the Contract).

20. The Contract is comprised of: an outline of the training covered by the Contract; Operating Guidelines; the Approved Qualifications Schedule; and the policies published by the Department in connection with the Contract as added, amended or replaced by the Department from time to time. I set out in due course the relevant provisions of the Contract and summarise the evidence as to how the Smart and Skilled program operated in practice; and how claims for Subsidies and Loadings were made (and reviewed). At this stage, suffice it to note that (under the contractual arrangements) the Department agreed, subject to conditions, to pay MIBT for the provision of training to students in New South Wales by way of “Subsidies” and “Loadings”.

19. Entitlement to payment was based on certain Unit of Competency (UoC) outcome codes, which represented milestones justifying payment for training. Those outcome codes relevantly included: Code 20 (a pass); Code 30 (a fail – although I understand that more commonly a student would not fail but would simply either continue or not continue the course); Code 40 (“withdrawn” – where a student has “Participated in Subsidised Training” in a “manner that exceeds mere attendance or accessing training material” but has withdrawn from the course; i.e., the RTO’s entitlement to remuneration is not dependent on the student ultimately passing the course or gaining the relevant competency); and Code 70 (“continuing enrolment” or “TNC” – which acronym means training not complete but where there is a continuing enrolment and, again, this outcome code is dependent on the student having “Participated in Subsidised Training” in the requisite manner). Much of the dispute over payments now claimed by MIBT (the “big ticket item” as it was described in submissions) relates to the “withdrawn” and “TNC” outcome codes (Codes 40 and 70), as I will explain in due course.

Performance audit – May 2019

22. On or around 22 May 2019, the Department wrote to MIBT, notifying MIBT that it wished to conduct a performance monitoring audit. That audit occurred during the months of June and July 2019 and was undertaken by the Illawarra and South East Regional Office of Training Services NSW.

23. On 2 August 2019, the Illawarra Regional Office emailed the Department and prepared a memorandum concerning issues relating to the performance monitoring of MIBT. (This memorandum was not provided to MIBT at that stage.)

MIBT report to Department concerning alleged fraudulent claims

24. On or around 25 September 2019, MIBT (of its own volition) reported to the Department allegations of fraudulent claims of Subsidies and Loadings. This followed an internal investigation within MIBT codenamed “Operation Fish”. The allegation, relevantly, involved the alleged falsification of data (including data relating to non-existent students).

25. The evidence of Mr Paul Lawrence, the sole director, founder and Chief Executive Officer of MIBT, is that he became aware in July 2019 that MIBT’s then national training manager and certain trainers were involved in fraudulent activities – issuing certificates and qualifications without evidence that those students had completed the requisite assessment. Mr Lawrence has deposed that there was an internal investigation; the individuals involved were immediately dismissed; and the matter was reported by MIBT to the police as well as to the NSW Department of Fair Trading and ASQA in July 2019 (see the first affidavit of Paul Lawrence, affirmed 30 March 2021 at [29]-[31]).

Anonymous complaint to the Department – October 2019

26. On 8 October 2019, the Department received an anonymous complaint from an employee from MIBT concerning allegations against MIBT such as “changing invoices, fabricating evidence, misinformation given to students, and signing up students to several courses without their knowledge or consent”. MIBT was not notified of the October 2019 complaint at that stage.

Conclusion of performance monitoring and referral to Quality Assurance

27. On 13 November 2019, the Illawarra Regional Office concluded the performance monitoring audit of MIBT.

28. Following that review, the matter was referred to the Department’s Quality Assurance (QA) section. Between 13 November 2019 and December 2019, QA retained an external reviewer, Mr Andrew Schofield, to review evidence provided to the Department in respect of MIBT’s performance under the Contract.

29. On or around 9 December 2019, Mr Schofield provided his report to the Department, which identified two broad areas of default under the Contract, namely: breach of Record Keeping Requirements in relation to cl 17.2(i) of the Operating Guidelines and cll 13.1 and 14.1(a) of the Contract Terms and Conditions; and breach of Training and Assessment Requirements under cl 14.1(a) of the Operating Guidelines. These provisions are as follows.

30. Clause 7(i) of the Contract Terms and Conditions provides as follows:

(information true, accurate and complete) ensure that all information [MIBT] provides the Department (including Training Activity Data) is true, accurate, complete, and not misleading in any way.

31. Clause 13.1 of the Contract Terms and Conditions is as follows:

13.1 Records

(a)   The Provider will create, collect and maintain records in compliance with its obligations under the Contract and will make these records available to the Department when requested from time to time.

(b)   The Provider will comply with the record keeping obligations set out in the Operating Guidelines, the Fee Administration Policy, and all Applicable Laws.

(c)   The Provider will retain the required records for not less than 3 years after the relevant Enrolled Student completes or ends their Subsidised Training. The required records will be readily accessible, easily distinguishable and able to be separated from the records for the Provider’s Training that is not Subsidised Training.

32. Clause 14.1(a) of the Contract Terms and Conditions provides:

Training Activity Data for every Enrolled Student who has Commenced must be reported by submitting the Training Activity Data in accordance with the Operating Guidelines.

33. The Operating Guidelines, in turn, provide at cl 14.1(a):

The Provider must deliver Subsidised Training that is:

(a)   consistent with the Australian Qualifications Framework qualification type learning outcomes descriptor ‘Volume of learning’ for each qualification level

…

Suspension of MIBT’s Contract – December 2019

34. On 13 December 2019, the Department, on the recommendation of QA, issued a suspension notice to MIBT under cl 21.2 of the Contract (December 2019 Suspension) (see below). This had the effect of preventing MIBT from enrolling or commencing any new students under the Contract (but did not prevent MIBT from providing training for those students already enrolled). The Department also withheld the payment of Subsidies and Loadings to MIBT.

35. The December 2019 Suspension was expressed to be based on various Events of Default, within the meaning of cl 21.2(e) of the Contract (see below). The Department sought a response within 28 days (i.e., by 10 January 2020) and offered MIBT the opportunity to meet with representatives of the Department to discuss the alleged Events of Default. (MIBT notes that, while the December 2019 Suspension notice did not expressly refer to cl 21.2(d) of the Contract, it plainly followed the procedure there contemplated.) The notice advised that, if no response was received within the timeframe, it would be deemed to have denied the Events of Default and the Department would proceed to finalise the performance monitoring.

36. The Events of Default there identified were: first, breach of warranty as to the qualifications of two trainers (Mr Lawrence himself, although the Department was ultimately satisfied as to this issue; and a Mr Dean Edser, who it does not appear to be disputed did not hold the requisite qualifications); second, as to the RPL (Recognition of Prior Learning) process in relation to two of 15 qualifications (the Advanced Diploma of Building and Construction Management; and Certificate III in Carpentry); third, a breach in relation to record keeping (insofar as MIBT did not keep records as to evidence supporting credit transfers for various students; nor as to evidence to support the granting of Recognition of Prior Learning; nor evidence of assessment and student responses as part of the Recognition of Prior Learning application; nor evidence of assessment for UoCs where outcome code 20 was reported); and, fourth, a failure to maintain records(insofar as there was: insufficient evidence of required skills in Recognition of Prior Learning; insufficient evidence of assessment of performance criteria, required skills, required knowledge or critical aspects of assessment; and third party reports were incomplete in relation to work verified by that third party). Pausing here, it is relevant to note that Mr Edser was not a trainer, as such. His role was in relation to the assessment of credit for prior learning (the RPL process). Hence, there was what the Department describes as the “flow-on” effect of the issue as to Mr Edser’s qualifications – that being the need to re-assess the competency of the relevant students whom he had assessed as part of the RPL process.

37. On or around 14 December 2019, MIBT responded to the December 2019 Suspension, accepting the Events of Default and indicating that it would take steps to rectify those matters. (Pausing here, the Department says that some of those Events of Default were extant or unremedied by the time of termination of the Contract; in which context it is relevant to note that MIBT did not dispute the existence of those Events of Default at least at that stage (though see below as to Mr Lawrence’s position in relation to the subsequent “remediation” documents review).

38. On 17 December 2019, there was a meeting between the Department’s representatives and MIBT. Nothing was made of this meeting in submissions.

39. On 6 January 2020, MIBT provided a USB to the Department that contained documents referred to in the schedule to MIBT’s letter of 14 December 2019.

Partial lifting of December 2019 Suspension – January 2020

40. On or about 21 January 2020, MIBT wrote to the Department, requesting that the December 2019 Suspension be lifted.

41. On 24 January 2020, the Department responded to MIBT, advising that several of the Events of Default remained outstanding. The Department indicated that it would pay Subsidies and Loadings relating to enrolled apprentices, subject to Training Activity Data submitted by MIBT being approved; but that, for all other programs, Subsidies and Loadings would not be released until the outstanding Events of Default were remedied.

Meeting on 31 January 2020

42. On 31 January 2020, a further meeting was held between representatives of the Department (Mr Stephen Buddeke, the Leader of Performance Management (Reconciliation and Appeals), and Ms Madonna Lombardo, from QA) and representatives of MIBT (Mr Lawrence and MIBT’s Chief Operating Officer, Mr David Thompson) to discuss the Events of Default referred to in the 24 January 2020 letter (relating to the December 2019 Suspension) (see T 78.19-37). At the meeting, Mr Lawrence agrees that he accepted that the two trainers with older qualifications were to be “rescinded” (by which it seems he means that their qualifications were to be treated as rescinded) and that MIBT would re-assess the qualifications for those students that had been assessed by Mr Edser (see T 78.45-50). (As noted, Mr Edser was not involved in the training of students – rather, he was involved in assessing the recognition to be given for their prior learning.) Mr Lawrence said in his oral evidence that MIBT only rescinded qualifications for those students who were not yet competent – see T 79.3-4); but presumably in order to determine this what was involved was some assessment or re-assessment of the competency of those students.

Lifting of balance of December 2019 Suspension – February 2020

43. On 4 February 2020, the Department wrote to MIBT lifting the balance of the December 2019 Suspension. The Department in that letter acknowledged MIBT’s willingness to engage in a continuous improvement plan and advised that it had decided with immediate effect to lift all suspensions put into place. Despite the lifting of this suspension, the Department required MIBT to remedy the remaining outstanding Events of Default, which the Department advised would be further reviewed by it later in 2020. Thus, the position of the Department as here communicated was that there remained extant Events of Default.

Review Notice – April 2020

44. On 29 April 2020, the Department sent an email to MIBT with a review of the “remediation” documents, outlining the remedial steps that MIBT would be required to undertake following the meeting on 31 January 2020. The deadline to provide such information and evidence to the Department was apparently later extended from 1 May 2020 to 30 May 2020 perhaps at the January 2020 meeting.

Progress of remediation plan

45. On 1 May 2020, representatives of the Department (Mr Buddeke and Ms Lombardo) and MIBT (Mr Lawrence and Mr Thompson) attended a meeting to discuss the progress of the remediation plan (see Ex PJL-1 to the affidavit of Mr Lawrence affirmed 30 March 2021, and marked as Ex A in the hearing). It was agreed that MIBT was to provide evidence of the assessments and provide information arising out of the 31 January 2020 meeting; and the time for this was extended to 30 May 2020 apparently due to the COVID pandemic (see T 79.48-50). It was agreed that MIBT would supply RPL (Recognition of Prior Learning) data for 10 students and would reassess 4 levels of competency for one student. In his evidence in cross-examination (see T 80.21-38), Mr Lawrence said that he did not necessarily agree with the entirety of the Department’s review of the remediation documents, as was articulated by Mr Lawrence in a letter of 30 May 2020 (see Ex A) but he accepted that what happened in the meeting was as there set out.

15 May 2020 review notice

46. On 15 May 2020, the Department issued MIBT with a Review Notice pursuant to cl 6 of the Contract.

47. Pausing here, MIBT says that the issuing by the Department of the 15 May 2020 Review Notice had the effect of bringing the next Contract (i.e., the relevant Contract the subject of the subsequent 2021 termination notice) into existence, with a commencement date of 1 July 2020. MIBT accepts that, but for that step, the existing Contract (i.e., the one that was on foot as at 15 May 2020) would have come to an end on 30 June 2020. MIBT places emphasis on the fact that, whatever the concerns held by the Department about the Events of Default asserted on 13 December 2019, or the adequacy of MIBT’s efforts to address those matters in the five months following the December 2019 suspension notice, neither the Events of Default nor the steps taken to address them were apparently of sufficient concern to the Department to lead to it not renewing the Contract then on foot. I accept the force of that submission (particularly in circumstances where the ultimate termination notice referred to those Events of Default, which related to a by then previous contract) but I also note the Department’s rejoinder to this, which is in effect that the history of past default (under previous contracts) may permissibly inform the Department’s attitude to fresh defaults under the new contract and moreover, the Department contends that some or all of the earlier Events of Default were still subsisting.

48. On 30 May 2020, MIBT wrote to the Department outlining the steps undertaken to remediate the Events of Default subject to the December 2019 Suspension.

External review

49. On 8 June 2020, the Department engaged the services of Ms Giselle Mawer, an external specialist reviewer, to review the evidence provided by MIBT in response to the Department’s request.

Request by Department for further information

50. On 15 June 2020, the Department sought further evidence from MIBT and on 19 June 2020 further documentation was provided.

ASQA suspension – June 2020

51. On 19 June 2020, ASQA informed the Department that it intended to suspend certain qualifications of MIBT. Following this, on 22 June 2020, ASQA sent to MIBT a notice of decision to suspend part of its scope of registration under the NVETR Act. The notice was limited to four qualifications (or courses) offered by MIBT in relation to its registration capacity, and the suspension was to be effective on 27 July 2020. The effect of that ASQA suspension was that MIBT could not register new students in those four courses until the suspension was lifted. MIBT lodged an objection to this (ASQA) suspension on or about 19 July 2020. (At some stage there was also a suspension imposed by the ACT Government, although it is not clear when this was.) It is relevant to note that the ASQA suspension would undoubtedly have been an Event of Default under the Contract within the meaning of cl 21.2€(vi) or (x) and that MIBT accepts that the ASQA suspension was an Event of Default under the Contract (see T 12.34-44).

Completion of external review

52. On 29 June 2020, Ms Mawer completed her review of the Advanced Diploma of Building and Construction (Management) and the Diploma of Building and Construction qualification courses and of the RPL (Recognition of Prior Learning) Process used to assess these qualifications.

July 2020 Suspension by Department

53. On 13 July 2020, the Department, by then having become aware of ASQA’s decision, suspended MIBT from the same four qualifications as had ASQA (July 2020 Suspension).

Review of documents provided by MIBT

54. Between 13 July 2020 and 11 September 2020, the Department continued to review the documents provided to the Department by MIBT in relation to the matters forming the basis for the previous December 2019 Suspension.

Request for a stay

55. On 27 July 2020, the Department received an email from ASQA noting that MIBT had written to ASQA for reconsideration of its decision and requested a stay. ASQA notified the Department that the Chief Commissioner of ASQA had agreed to stay the operation of the decision, pending the outcome of the reconsideration.

Department endorses QA recommendations regarding MIBT

56. On 21 August 2020, the Department’s Quality Review Committee endorsed the QA’s recommendations concerning Ms Mawer’s findings. The Committee determined that the issues with MIBT were systemic, and that MIBT’s contract should thus be suspended across all qualifications.

Complaint to Department regarding MIBT training

57. On or around 23 August 2020, the Department was notified by the parent of one of MIBT’s enrolled students of a complaint concerning the lack of training afforded to her son (to whom I will refer as Student X). This complaint was not notified to MIBT at the time.

September 2020 Suspension

58. On 11 September 2020, the Department provided MIBT with a further notice suspending all qualifications under the Contract; and invited a response from MIBT (September 2020 Suspension). The Department asserted that MIBT had not adequately addressed the Events of Default the subject of the December 2019 Suspension (i.e., the suspension relating to the previous contract, not to the Contract that was on foot at that time). MIBT says that Appendix A to the September 2020 Suspension notice shows that from the Department’s point of view there was only one issue with qualifications – that relating to Mr Edser (see T 81.46-50). At T 82.21-27, Mr Lawrence said that he had provided the Department with all information in relation to the re-assessments and rescinding of qualifications. Mr Lawrence made representations to the Department to the same effect in a letter sent on his behalf by his then solicitor, Mr Cribb (see Ex A). Mr Lawrence says that he had provided evidence of this back in the January and February 2020 meetings (see T 84.35-37). (Indeed a common theme in Mr Lawrence’s oral evidence was frustration with the Department’s continuing requests for information (see T 81.46-48) based, as I formed the impression from his evidence, on a genuine misunderstanding between the Department and MIBT as to what was required to satisfy the Department’s requests.)

59. The suspension notice provided:

On 13 December 2019 the Provider was notified by the Department of a number of Events of Default under the Contract. The Department afforded the Provider an opportunity to show, for each issue identified, that no such Event or Default occurred, or, where the Event of Default did occur, that it was remediated.

The Department has reviewed the Provider’s responses of 14 December 2019, 30 May 2020, and 19 June 2020 and have found that the Provider has failed to show that all of the Event of Default did not occur or demonstrate adequate remediation.

60. The reason provided by the Department for this suspension thus referred to the responses by MIBT on 14 December 2019, 30 May 2020 and 19 July 2020 and said that MIBT had failed to show that all Events of Default did not occur or to demonstrate remediation. MIBT points out that the September 2020 Suspension was therefore relying on the failure of MIBT to do things in relation to the Events of Default referred to in the notice issued under the earlier contract.

September 2020 meeting

61. On 16 September 2020, Mr Lawrence contacted Mr Scott Andrew Molloy (a Manager, Quality Assurance and Compliance in the Department) to discuss the Events of Default. (Relevantly, I note that there is a distinction between those involved in the investigation of the complaints made about MIBT and the performance monitoring of MIBT as was explained at T 150.8-12.)

62. On 29 September 2020, at a meeting between representatives of the Department (including Mr Buddeke) and MIBT it was agreed that MIBT would provide to the Department copies of documents in relation to the Events of Default.

Provision of material to Department and legal communications disputing July 2020 suspension

63. In early October 2020, MIBT provided the Department with further information as requested by the Department. At around this time, MIBT engaged lawyers to act on its behalf.

64. On 6 October 2020, MIBT’s then lawyer, Mr Cribb, wrote to the Department. Again, on 7 October 2020, Mr Cribb wrote to the Department and in that letter disputed the July 2020 Suspension.

65. MIBT’s solicitor argued in this correspondence, among other things, that there should not be a suspension from all of the qualifications but only those the subject of the ASQA notice. At T 92.38-44, Mr Lawrence explained that the letter was asking to lift suspension for the qualifications not affected by the ASQA notice and was asking the Department to clarify what it wanted from MIBT.

66. On 9 October 2020, the Department asked for some time to respond to the letters of 6 and 7 October 2020 and indicated that it would try to respond by 16 October 2020.

67. On 13 October 2020, MIBT provided further material to the Department following the 29 September 2020 meeting. This additional material was provided to the Department’s external reviewers, Ms Mawer and Mr Schofield.

68. On 14 October 2020, the Department received Ms Mawer’s report. Ms Mawer determined that MIBT had failed to remediate the Events of Default.

ASQA variation, then revocation, of MIBT suspension

69. On the same day as the Department received Ms Mawer’s report (14 October 2020), ASQA decided to vary its suspension of MIBT; although, in so doing, it advised that MIBT remained non-compliant. MIBT was to take steps to rectify the issues identified by ASQA within 20 working days following receipt of notice of the decision.

70. On 16 October 2020, ASQA revoked its suspension of MIBT. ASQA informed MIBT that it had varied its decision and would not be imposing a suspension. ASQA said that it had decided to issue a written direction requiring MIBT to rectify specified breaches within 20 working days. (MIBT emphasises the detail of that direction, noting that it related to non-compliance with only two (not four) of the relevant clauses (i.e., cll 1.8 and 3.1 of the Standards for RTOs) and that it was in relation to only four of the fifteen courses offered by MIBT.) MIBT explains that the ASQA report was not in relation to the Advanced Diploma course (referred to above); rather the ASQA notification of non-compliance related to the two carpentry courses. As noted earlier, MIBT also points out that Mr Edser did not teach; rather, he assessed previous skills and his role was in relation to the RPL process (see T 85.31-34; T 86.4-28).

71. Pausing here, it seems clear from the cross-examination at T 89 that MIBT and the Department were at cross-purposes in relation to the assessment of students affected by the issue in relation to Mr Edser. Mr Lawrence agreed (at T 91.40-43) that the material provided by MIBT did not provide evidence in relation to the Advanced Diploma of Building and Construction (though, as noted, by this stage this was not the subject of the ASQA notification).

Further communications between Department and MIBT’s lawyer

72. On 16 October 2020, the Department wrote to Mr Cribb, responding to his letters of 6 and 7 October 2020. The Department informed Mr Cribb that it had arranged for a specialist reviewer to review the information provided by MIBT on USB on 29 September 2020, and the information contained in Mr Cribb’s letter of 6 October 2020. The Department represented that it would be in a position to respond to these matters by 23 October 2020. As to the 7 October 2020 letter, which sought to have the July 2020 Suspension rescinded, the Department noted the further suspension notice issued on 11 September 2020, stating that the broad nature of this September Suspension reflected the serious concerns of the Department in relation to MIBT’s performance as a Smart and Skilled Provider. The Department stated that, as the matters set out in the September 2020 Suspension remained outstanding, it would not lift the current suspension.

73. On 19 October 2020, Mr Cribb wrote to the Department, again disputing the July 2020 Suspension. In that letter, Mr Cribb stated that his letter of 6 October 2020 related to the September 2020 suspension. As to the letter of 7 October 2020, Mr Cribb stated that this letter pertained to the July 2020 Suspension, which overlapped in part with the September 2020 Suspension. Mr Cribb emphasised that it would be necessary to lift the July 2020 Suspension, were the September 2020 Suspension to be lifted, in light of that overlap. Mr Cribb stated that, insofar as the July 2020 suspension was made “in line with” ASQA’s decision to suspend the four qualifications, that the Department ought, in line with ASQA’s handling of the suspension, delay the implementation of its suspension decision while ASQA conducted the review of its decision.

Schofield report 20 October 2020

74. On 20 October 2020, Mr Schofield provided a copy of his report to the Department.

75. On 26 October 2020, the Department wrote to MIBT providing it with further information relating to the Events of Default. A copy of the Schofield report was not provided to MIBT at this stage.

ACT Government lifts a suspension it had imposed on MIBT

76. On 2 November 2020, in light of ASQA’s position, the ACT Government lifted a suspension of MIBT that it had itself imposed.

Further communications regarding the Events of Default and suspensions

77. Between November 2020 and December 2020, correspondence was exchanged between MIBT and the Department in relation to the ongoing Departmental suspension, in circumstances where the ASQA suspension had been removed.

78. On 5 November 2020, the Department wrote to MIBT noting that the July 2020 Suspension and the September 2020 Suspension remained in force.

79. On 6 November 2020, MIBT’s lawyer responded to the Department’s letter of 5 November 2020. Mr Cribb requested a copy of both Ms Mawer and Mr Schofield’s reports in order that MIBT could understand which outstanding Events of Default it had failed satisfactorily to remediate. Mr Cribb further requested copies of any other documents held by the Department to which the Department had regard in determining that the suspensions were to remain in force. Mr Cribb requested that the Department advise him of the avenues of review of the Department’s decision not to lift the suspensions.

Provision of Mawer and Schofield reports to MIBT

80. On around 9 November 2020, pursuant to an application by MIBT under the Government Information (Public Access) Act 2009 (NSW) on 7 November 2020, the Department provided both the Mawer and Schofield reports to MIBT.

Further communications in November 2020 – January 2021

81. On 20 November 2020, MIBT wrote to the Department outlining various steps that it said were designed to address the Department’s concerns in relation to the assessment and reassessment of its students.

82. On 25 November 2020, the Department emailed MIBT noting that it had determined that the Events of Default as they concerned Mr Edser had been remediated. However, the Department advised that the remaining issues had not been remediated.

83. On 26 November 2020, Mr Cribb wrote to the Department seeking a substantive response to his earlier letter of 6 November 2020 (in which he had requested various documents from the Department, and claimed that MIBT had not been provided with adequate particulars in order to address the Department’s concerns). Mr Cribb reiterated his request for various documents in the 26 November 2020 letter.

84. On 10 December 2020, the Department responded to Mr Cribb’s letters of 6 October 2020 and 26 November 2020, including reference to the ASQA direction and noting that MIBT had not been advised that the non-compliances had been remedied. The Department sought a list of students that had been taught by Mr Edser to confirm that those students had been reassessed by a qualified trainer. (Again, I note that MIBT says that Mr Edser’s role was not that of a teacher or instructor.)

85. The above communication apparently crossed with an email from MIBT on 10 December 2020, enclosing a report from Mr Joe Newbery (an RTO compliance consultant and former ASQA auditor), who had been retained by MIBT, which report concluded that MIBT had in fact remedied the matters identified by ASQA. That email provided further information, which it was said answered all the outstanding Events of Default. MIBT argues that from the timing of the 10 December 2020 communications it seems that at the time of the Department’s response the relevant decision-maker, Mr Emil Tabone (see T 15.9-50) was not aware that ASQA had accepted that there had been rectification of the non-compliances it had identified; and that would seem to follow from the content of the Department’s 10 December 2020 response and the subsequent letter of 22 December 2020 – see below. (Mr Tabone did not give evidence in the proceeding.)

86. On 22 December 2020, the Department advised MIBT that it was reviewing the information provided on 10 December 2020.

87. On 23 December 2020, Mr Cribb sought further particulars of the Events of Default and commented upon the reports of Ms Mawer and Mr Schofield.

88. The Department sent an interim response to Mr Cribb’s letter on 22 January 2021, and advised that the outstanding Events of Default remained. MIBT pressed the Department for a response. The Department responded that day again seeking further information. Relevantly, the Department requested updated evidence for two particular qualifications (or courses) and reassessment evidence for five students (though it did not identify any particular students in this regard) and said that the Department would then be able to complete a full review.

Complaints from former trainers

89. During January and February 2021, the Department received two separate complaints from former trainers of MIBT. (MIBT was not advised of those complaints at that time; and when it subsequently became aware of these complaints it characterised the former trainers as disgruntled.)

90. Between 10 and 19 February 2021, representatives of the Department interviewed former trainers and apprentices of MIBT.

February 2021 communications

91. Meanwhile, on 3 February 2021, there was a meeting with representatives of the Department (Mr Molloy, Ms Linna Nguon and Mr Emil Tabone) and MIBT (Mr Lawrence and Mr David Thompson). Mr Lawrence agreed (T 77.19-25) that at the meeting he accepted the various stated Events of Default and that MIBT had worked towards, and would continue to work towards, rectifying them.

92. On 4 February 2021, MIBT gave a detailed response to the Department and again requested that the suepensions be lifted in relation to all qualifications (excepting the Certificate III in Carpentry, the Advanced Diploma of Building and Construction (Management) and the Diploma of Building and Construction (Building)). MIBT further requested that the Department provide feedback in relation to the material already provided by MIBT. On 15 February 2021, MIBT again pressed the Department for a response.

Letter raising allegations of fraud – 4 March 2021

93. On 4 March 2021, the Department wrote to MIBT concerning alleged further breaches of the Contract and requested that a meeting take place on 12 March 2021. The Department in that letter advised MIBT that it had received feedback from various third parties relating to training being delivered and that there had been complaints, some of which (if true) may have amounted to very serious misconduct by senior management of MIBT (namely that senior management had instructed trainers to “manipulate” the “LMS” (Learning Management System, which was a software system used by MIBT to record and “track” the progress of students) so that it recorded false information). In cross-examination, Mr Buddeke readily conceded that these were serious allegations (T 140.39-41).

94. MIBT responded on 10 March 2021, stating that the 4 March 2021 letter had failed to particularise any relevant breach and seeking full particulars (see T 140.43-47).

Meeting on 12 March 2021

95. On 12 March 2021, a meeting took place between representatives of the Department (Mr Tabone, Mr Buddeke and Ms Linna Nguon) and MIBT (Mr Lawrence, Mr Thompson and Ms Nora Nagy). At that meeting, MIBT’s representatives adamantly denied any wrongdoing. In an email of 12 March 2021, following the meeting, Mr Lawrence referred to the former trainers as being disenchanted (which on its face would surely have suggested that they might have an axe to grind against MIBT and which would warrant careful consideration and an attempt to corroborate those allegations). A transcript of the discussion at that meeting was in evidence.

96. Relevantly, there was reference at the 12 March 2021 meeting to a “blended training model”. Mr Lawrence informed the Department representatives that a lot of the training happened with the employer and that the trainers would then go out and the students would “show us competency”. At T 100.35-50, Mr Lawrence explained this referring to “gap training”, by which he explained in effect that if a student already knew how to do certain things (say, how to hang a door) there was no point teaching that again and that the focus was on the gaps in their knowledge (giving an example of this). This is relevant because the Department appears to have understood the reference to “gap training” as suggesting that MIBT abdicated its training role largely to the employers. I did not understand the evidence to be to that effect.

97. I note that Mr Lawrence identified in cross-examination that a complaint purportedly made by a former training coordinator was from a made-up email address (T 101.23-29). Mr Lawrence readily agreed that it was impossible to teach up to 15 UoCs per day (that being part of the complaint in question) but also later explained that some of the data uploaded on the same day by one of the trainers (for example) did not relate to training on that same day (suggesting that it was simply an error in uploading that was later corrected – see T 104.1-14).

98. MIBT points out that there was no discussion at the meeting which indicated anything other than that the Contract was continuing and there was no assertion by the Department that any alleged event of default was likely to bring about termination.

99. Mr Buddeke agreed that, at the 12 March 2021 meeting, he did not supply the documents that had been requested by Mr Cribb; nor did he do so prior to the termination of the Contract and that he did not explain to Mr Cribb why he did not do so. Mr Buddeke agrees that he did not tell MIBT the names of the people who had made the allegations against MIBT. At T 142.3-5, Mr Buddeke agreed that he had “pages and pages” of documents relevant to the allegations that had been made and that the Department’s investigation had been going on for some time. Mr Buddeke seems to have accepted that he made a conscious decision not to give the documents to Mr Cribb at any relevant time. Mr Buddeke’s investigation comprised speaking to other people first, providing information about the allegations and seeking a response “if needed” (see T 142.37-43). At T 149.46-49, Mr Buddeke did not accept that in the absence of giving the identity of the complainants or the documents there was not a fair opportunity for MIBT to respond thereto.

100. By email dated 12 March 2021, following the meeting MIBT indicated that it was providing information to “clear the air”, and made it clear that the allegations of wrongdoing were denied. Mr Lawrence there summarised what he understood to be the outcome of the meeting and the nine things that he understood had been sought from the Department, in order to seek confirmation of the same. Further, Mr Lawrence asked to be told the names of the five students for the three qualifications across two units, so that the reassessments could be commenced.

101. Pausing here, Mr Buddeke’s evidence in effect was that at the 12 March 2021 meeting he asked Mr Lawrence to provide him with information or documents that he, Mr Buddeke already had in his possession – apparently simply because Mr Lawrence had said that it was available (see T 160.10-41); and seemingly to give Mr Lawrence the opportunity to provide documents relevant to MIBT’s position. It is difficult to see what purpose was thought to be served by duplication of the provision of information – if Mr Buddeke wished to check the authenticity of documents he already had, a simpler course would have been to clarify that with Mr Lawrence.

102. Mr Lawrence’s email referred to two timeframes – as to the documents referred to in the nine paragraphs, he sought confirmation that they were required to be sent to the Department within one week (but in cross-examination he says that he only received the confirmation he had requested as to the documents to be provided on 19 March 2021 – see T 93.43-47). As to the second timeframe, Mr Lawrence sought confirmation that the Department would advise MIBT of the five students within three weeks to enable MIBT to conduct the re-assessment of those students.

103. On 19 March 2021, the Department emailed MIBT seeking further information and documents, including a video of a training session conducted in Hay, NSW, (to which reference had been made at the 12 March 2021 meeting). MIBT replied early that morning, thanking the Department for attending a training session on 16 March 2021 and requesting a response to the 12 March 2021 email.

104. Mr Buddeke accepts (see T 150.11-14) that at the 12 March 2021 meeting (the transcript of which suggests it lasted 143 minutes) it was agreed that the Department was to provide MIBT with the identity of five students (i.e., five names) so that MIBT could respond and that MIBT could not respond until it received those names (T 154.3-11). At T 151.14-19, Mr Buddeke accepted that he understood that he had to come to a decision on the balance of probabilities as to whether he believed the circumstances as alleged by the complainants had occurred or not and that the process had to be a fair and reasonable one.

105. As to the request by Mr Lawrence that Mr Molloy provide the identity of the five students within three weeks, at T 153, Mr Buddeke said that he did not read this as asking him for confirmation (and it seems he did nothing until he received the five names from Mr Molloy). Mr Buddeke says that he provided Mr Lawrence with the names of those students as soon as he received them. Mr Buddeke in fact provided those five names at 1.58pm on 19 March 2021, however it is unclear when he received that information. Mr Lawrence says he would not have seen this until he was back in the office on the following Monday morning (i.e., 22 March 2021). This is of some relevance given that the meeting to determine the termination was on 23 March 2021, before any reasonable opportunity for MIBT to reassess the five students (whose names had only just been provided late on 19 March 2021).

95. Mr Buddeke agreed that at the meeting Mr Lawrence was saying that the complainants might be motivated to make false complaints – but did not see that the trainers might have an axe to grind (see T 152.20-24).

Communications as to further documents to be provided

107. Between 12 and 23 March 2021, various emails were exchanged between MIBT and the Department concerning further documents to be provided by MIBT.

Quality Review Committee meeting – 23 March 2021

108. On or about 23 March 2021, the outcome of investigations undertaken by the Department were provided to the Department’s Quality Review Committee. It is relevant here to note that the Committee did not have any response by then from MIBT in relation to the queries relating to the five students (for obvious reasons given the delay in provision of the names for a start). Mr Buddeke appeared to accept that Mr Lawrence’s 6.52am email on 23 March 2021 would not likely have been before the committee.

109. The interim investigation report appears to have been prepared by 2 March 2021 and Mr Buddeke accepted that it had been finalised sometime between then and 11.00am on 23 March 2021 when the committee meeting occurred (T 163.29-50).

110. MIBT complains that the committee considered the accounts of the people who had made the complaints and accepted those: in preference to the denials by Mr Lawrence and Mr Thompson; without interviewing any other people such as current trainers; without the detail which the Department had itself requested (T 19.1-9); and without MIBT having an opportunity to assess whether any event of default could have been remedied. In this context, it is relevant to note that Mr Buddeke’s investigation report rejected the allegation of serious fraud (as he accepted at T 167.10-31).

Termination of Contract – 25 March 2021

111. On 25 March 2021, the Department issued its Notice of Termination to MIBT, terminating the Contract (Termination Notice). The Termination Notice stated that it was issued pursuant to cl 21.2(c)(vi) of the Contract (see below). It did not in terms specify the particular Event of Default upon which reliance was placed. Rather, the Termination Notice referred to: the 13 December 2019 letter (i.e., the December 2019 Suspension Notice, which MIBT notes preceded entry into the Contract that was on foot as at March 2021) and the 4 March 2021 letter (see above). MIBT points out that some of the matters in the 4 March 2021 letter had been rejected at the 23 March 2021 meeting of the Committee.

112. Mr Tabone is recorded in the minutes of the meeting as having said that responses had been provided and that the provider (i.e., MIBT) had “failed to show all the Events of Default did not occur or demonstrate satisfactory remediation”.

113. Pausing here, MIBT says that it was not open to the Department (having embarked on the cl 21.2(d) exercise) simply to terminate before providing MIBT with anything resembling an opportunity to show that the alleged event of default had not occurred or had not been remediated (see T 19.32-38). Further, it is said that reliance on the Events of Default in the December 2019 Suspension Notice was problematic in that it was pre-contractual conduct that had only previously warranted, in the Department’s view, suspension of some (or all) of the courses going forward. It is said that it cannot have been reasonable to terminate on 25 March 2021 without giving notice to MIBT. (That may well have been the case in that embarking on the process may have conveyed or induced an expectation of due process but that is not the nub of the present complaint – which turns on whether as a matter of construction it was possible to terminate on one basis having commenced the process under another basis.)

114. MIBT accepts that a history of problematic conduct might provide a factual context for a later decision to terminate (see T 20.3) but says that the catalyst for the termination on 25 March 2021 must have been the 4 March 2021 letter because, without that or the allegations referred to therein, the Department had not decided to terminate and had not responded to Mr Newbery’s opinion as to the remediation of the earlier Events of Default.

115. MIBT says that the Termination Notice did not contain a valid reason for termination pursuant to cl 21.2(c)(vi) and that neither of the two letters to which reference was made in the Termination Notice contained a valid reason for termination.

116. On 26 March 2021, MIBT responded thereto, claiming that the Termination Notice was an “extraordinary event” in light of its issuance based on the 13 December 2019 Suspension Notice and 4 March 2021 letter. Mr Cribb, MIBT’s solicitor, noted that the Department had not responded to his various letters seeking particulars of the matters raised in the Departments letter of 4 March 2021. Mr Cribb noted MIBT’s willingness and preparedness to address the Departments concerns. MIBT requested that the Department allow MIBT to continue to deliver Subsidised Training to enrolled students. Mr Cribb stated that, in view of the urgency of the request and the Department’s “past tardiness” in responding to his correspondence, MIBT would proceed on the basis that the Department agreed to the request to allow MIBT to continue to deliver Subsidised Training for enrolled students.

Claim by MIBT regarding amounts owing under the Contract

117. The last payment of Subsidies and Loadings was made by the Department to MIBT on 1 March 2021.

118. Between 25 March 2021 and 30 June 2021, MIBT continued to submit Training Activity Data via the Department’s Portal (see the definition of the Portal below).

119. On 9 April 2021, MIBT wrote to the Department (and contacted the Department by telephone) seeking payment of amounts said to be overdue and payable to MIBT.

Injunctive relief

120. In April 2021, MIBT commenced proceedings in this Court, seeking urgent interlocutory relief (by way of mandatory injunction) to compel the Department to continue to perform the Contract notwithstanding the purported termination of the Contract (see as explained in the reasons subsequently published on 30 April 2021 by Kunc J – MIBT No 1).

121. Orders were made by Kunc J consent (without admission) on 12 April 2021 as follows:

1.   Upon provision of the Plaintiff of the usual undertaking as to damages, the Court orders the Defendant to continue to perform the Agreement between the parties entered into on or about 15 May 2020 and effective 1 July 2020.

2.   Order the Defendant to communicate to any and all students to whom it communicated previously the following by 5 pm on 13 April 2021:

“We refer to our previous communication to you in relation to your funded training in NSW through [Masters].

On 12 April 2021 the Supreme Court of NSW has ordered that the funding arrangement between the NSW Smart and Skilled and [Masters] continue.

Accordingly, this means that you are entitled to continue your subsidised training with [Masters] should you wish. Subject to any further order of the Court, the NSW Smart and Skilled funding arrangements with [Masters] will come to an end on 30 June 2021.

Your employer has been sent a similar email.”

3.   Order the Defendant to communicate to any and all employers to whom it communicated previously the following by 5 pm on 13 April 2021:

“We refer to our previous communication to you in relation to your employment of an apprentice or trainee who is undertaking funded training in NSW through [Masters].

On 12 April 2021 the Supreme Court of NSW has ordered that the funding arrangement between the NSW Smart and Skilled and [Masters] continue.

Accordingly, this means that your employee is entitled to continue his or her subsidised training with [Masters] should they wish. Subject to any further order of the Court, the NSW Smart and Skilled funding arrangements with [Masters] will come to an end on 30 June 2021.

Your employee has been sent a similar email.”

122. In MIBT No 1, Kunc J said the following at [7], [13] and [97]:

7.   The Court recognised that the relief sought by Masters was. in practical terms, tantamount to final relief. It was satisfied that there was a serious question to be tried as to whether the Department had breached implied obligations of good faith and to afford Masters a reasonable time to respond to matters alleged to be Events of Default under the Contract, such that the Department had not been entitled to terminate the Contract. The Court was satisfied that Masters had strong prospects of success in relation to the serious question to be tried. Furthermore, given the Department’s primary role under the Contract was to provide funding, in considering the balance of convenience the disruption to some BOO students of having their studies peremptorily terminated strongly favoured the relief being granted.

…

13.    .... While it was not practicable to deliver ex tempore reasons at the conclusion of the hearing, I informed the parties that the Court would grant Masters the interlocutory relief which it sought. Primarily, this required the Department to continue to perform its obligations under the Contract by providing funding (referred to in the Contract as “Subsidies and Loadings”). …

…

97.   … I regarded this as a case where it was desirable for me to evaluate the strength of Masters’ case for final relief, doing the best I could on the material before me. In my view, Masters had a strong case for final relief in respect of the matters which I have identified about which there was a serious question to be tried. That success would mean that the Department had not been entitled to issue the Notice of Termination.

MIBT demand for payment

123. On 13 April 2021, MIBT wrote to the Department demanding payment of $179,759.35, being an amount due and payable of the total debt owing to MIBT of $326,053.40. On 15 April 2021, MIBT wrote to the Department referring to its previous letter of 13 April 2021, asserting that a failure by the Department to pay the moneys demanded constituted a breach of the Contract and an actionable contempt by the Department.

Withholding of Subsidies and Loadings

124. On 21 April 2021, the Department responded to MIBT asserting that the consent order made by the Court on 12 April 2021 did not affect the Department’s rights under the Contract but, rather, reverted the parties to the status quo that existed prior to the letter of 25 March 2021 (i.e., the Termination Notice), in other words, reverting the parties to their pre-termination position, which it was said “had the effect of permitting [the Department] to withhold payment of any subsidies and loading payable”. The Department asserted an entitlement to withhold what was then alleged to be owing in the amount of $326,053.40. That letter also foreshadowed an application by the Department under the Court’s supervisory jurisdiction to resolve the question as to whether the Department was entitled under the Contract to withhold Subsidies and Loadings as it asserted.

125. On 22 April 2021, MIBT responded to the Department, denying that the Department was entitled to withhold all Subsidies and Loadings as alleged.

126. On 28 April 2021, the Department responded to MIBT’s letter of 22 April 2021 and reiterated its position insofar as the rights to withhold Subsidies and Loadings were concerned.

127. On 29 April 2021, MIBT responded to the Department’s letter and noted, amongst other things, that it would oppose the Department’s foreshadowed application for an order to withhold payments they alleged to be due under the Contract.

Interlocutory application by Department

128. On 4 May 2021, MIBT wrote to the Department indicating, amongst other things, that it would itself approach the Court if the Department’s foreshadowed (supervisory jurisdiction) application was not made (indicating that it would do so on the basis that the Department had committed contempt of Court).

129. On 11 May 2021, the Department filed a notice of motion in relation to the issue of its entitlement to withhold the payment of Subsidies and Loadings (which was subsequently encompassed in its cross-claim in the proceeding before me).

130. On 25 May 2021, a directions hearing took place before Kunc J sitting as duty judge. On 27 May 2021, Kunc J acceded to the orders sought by the Department, which included orders for payment of funds into court:

The Court makes orders in accordance with the document titled short minutes of order amended and initialled by Kunc J, dated [27 May 2020] and placed with the papers:

1.   Orders, on a without admissions basis, that the sum of $459,038.85 (Payment) be paid by the Defendant into Court pending the final determination of the substantive proceedings within 7 days of these orders.

2.   Notes that the Payment concerns an amount demanded by the Plaintiff on 25 May 2021 alleged to be owing to it by the Defendant, which the Defendant disputes and otherwise says it is entitled to withhold by reliance upon clauses 21.2(c)(ii), 21.6(b) and 22 of the Contract dated 1 July 2020 entered between the parties.

3.   Orders that the balance of the Defendant’s Notice of Moton filed 11 May 2021 be adjourned to be heard as part of the final hearing of the proceedings.

4.   Orders that costs of the Motion be the Defendant’s costs in the cause.

5.   Direct the proceedings are listed for further directions before the Expedition List Judge on 4 June 2021.

NOTE that, if so advised, the defendant may supersede its Notice of Motion by the relief it may seek by way of cross claim.

Further interlocutory application by MIBT

131. On 28 May 2021, MIBT filed a notice of motion seeking orders restraining the Department relying upon its powers under the Contract to withhold payment of Subsidies and Loadings.

132. It is relevant here to note that, between April and June 2021, the total value of Training Activity Data submitted by MIBT was approximately $2.74 million. The Department says that this amount exceeded what MIBT would typically submit during a 12-month period, noting by way of example that during the financial year 2019 to 2020, MIBT reported and was paid around $1.4 million. MIBT argues that this increased figure is not surprising since the termination of its Contract meant that an increased number of students “migrated” to other training providers and hence there was an increase in Code 40 and Code 70 outcomes.

MIBT email to students demanding payment

133. On 1 June 2021, MIBT emailed 245 of its New South Wales students demanding payment from them (on the basis that the absence of payment of Subsidies and Loadings meant that the students were liable for their courses) (MIBT Demand Email). The MIBT Demand Email (at best one would say most unhelpfully) stated that the students should contact the Department’s solicitors directly, naming the partner on the record in this proceeding and providing his email and telephone number.

134. On 4 June 2021, MIBT wrote to the same 245 students withdrawing the demand for payment from those students.

135. On 8 June 2021, MIBT provided to the Department a list of all students to whom the MIBT Demand Email was sent, together with bank statements of MIBT detailing what students, if any, had paid MIBT following the MIBT Demand Email.

136. Pausing here, nothing appears to turn on the sending and withdrawal of the Demand Email – it is simply included here as part of the context in which the dispute proceeded.

Department’s request for security for MIBT’s undertaking as to damages

137. On 11 June 2021, the Department requested that MIBT provide security for its undertaking as to damages in the amount of $520,399.97, being the estimated amount to which the Department considered it would be entitled on its cross-claim and therefore representing an unrecoverable amount owing to the Department if MIBT were to be placed into liquidation prior to the conclusion of the proceeding.

138. On 16 June 2021, MIBT responded to the Department, maintaining that: security in relation to the undertaking was not required or appropriate in the circumstances of the case (there referring to a letter of 3 June 2021 ); but that it would be agreeable to paying a further sum of $61,361.12 into Court, thereby bringing the amount paid into court up to the amount claimed by the Department.

Further interlocutory relief

139. On 22 June 2021, MIBT obtained interlocutory relief restraining the Department from exercising or purporting to exercise the right to withhold payment of Subsidies and Loadings (MIBT No 2). This does not appear to have resulted in any interim resolution of the issue as to Subsidies and Loadings at least insofar as MIBT’s position at the hearing before me was that it had not been paid any such amounts since March 2021.

Further termination notice

140. On 30 June 2021, the Department issued a further termination notice to MIBT (presumably out of an abundance of caution) stating that, subject to the present proceeding, that notice constituted a termination of the Contract by virtue of cl 5. (It is not apparent to me why any such notice would have been considered necessary as the Contract had not been renewed so would have expired in accordance with its terms in any event; and since the Department does not here contend that MIBT is disentitled to payments simply by reason of the termination – but nothing turns on this further termination notice and thus it is not necessary to explore its purpose.)

Direction to finalise submission of Training Activity Data

141. More relevantly, for present purposes, is the fact that on 30 June 2021 the Department issued a direction to MIBT in the following terms:

Within 28 days of the date of termination, the Provider must finalise the submission of Training Activity Data for all students via STS Online. Please contact Market Operations on 1300 772 104 for assistance if required.

The Provider’s access to STS Online will cease after 28 days of the date of termination.

142. Pausing here, the ability of the Department to issue such a direction (and the contractual requirement to follow such directions) is not really the issue here. Rather, what is at issue is the consequences of a failure (if there be a failure) to submit all relevant Training Activity Data by that perhaps arbitrarily imposed deadline. In other words, if MIBT did not submit within the stated time all the data that the Department’s assessors would now accept was sufficient to establish an entitlement to payment for services provided, would that disentitle MIBT to payment for those services (or would it simply sound in a claim for damages of some kind if the Department could show it was prejudiced by the late submission of the data)? I consider this further below.

The Department’s assessment of MIBT’s Training Activity Data

143. As at October 2021, some $2.7 million worth of Training Activity Data had been uploaded to the Department’s Portal (as adverted to above). Ms Nguon, who as noted above is the Senior Training Market Operations Officer in the QA unit within Training Services NSW (and who reports to Mr Molloy) (see her affidavit affirmed 6 October 2021), has deposed that one of her duties includes supervising case officers who manage performance monitoring matters and the evidence submitted to the Department by providers (see at [8]-[9]). Ms Nguon is familiar with the review process in relation to Training Activity Data, as she had been responsible for that process in her previous role in the Market Operations team at Training Services NSW for some 17 years (see at [11]).

144. Ms Nguon has deposed that, as at 1 October 2021, the Department had accepted Training Activity Data submitted by MIBT with the equivalent value of $466,024.88 (see at [47]). Ms Nguon has deposed that this Training Activity Data was accepted by the Department as it did not raise any “flags” in the Payment Analysis Tool (PAT) (to which I refer below).

145. As at 6 October 2021 (see the affidavit affirmed by Ms Nguon), the Department had rejected Training Activity Data commensurate to the value of $2,255,215.97 (comprised of a figure of $808,757.57 (see at [48]) and $1,446, 458.40 (see at [49]), the latter being referred to by Ms Nguon as the “Withdrawn Outcome TAD”).

336. Finally (despite some observations made during the course of argument as to some of the contents of the questions in the online materials – see T 229.42-48) MIBT says (and I accept) that the quality of the contents of certain of the questions in the training material is not in issue in this proceeding by the pleadings or the Department’s evidence. It is said that that content is regulated by ASQA and there is no relevant complaint about the contents of the materials in this proceeding.

Department’s submissions

340. As to the sum of $1.4 million rejected by the Department concerning “withdrawn outcomes”, the Department says that this is on the basis that the evidence sought by the Department from MIBT does not demonstrate evidence that “[t]he Enrolled Student has Participated in Subsidised Training for the Unit of Competency …” within the meaning of cl 14.3 of the Contract.

341. Reference is made to the definition of Participated in Subsidised Training and to the record keeping obligations for the purposes of cl 17 of the Operating Guidelines. In particular, it is noted that the provider is required to create, collect and maintain records for all Subsidised Training and for all enrolled students, as evidence of the delivery of Subsidised Training, including evidence of Participation in Subsidised Training or as otherwise required by the Department. This record keeping practice applies to all platforms of presentation of the relevant training. The reference in cl 17.5 of the Operating Guidelines to online delivery is said to be merely an additional requirement to that provider, rather than a separate “carveout”. It is said that, if the latter were to be so, one would expect clear language delineating a separate requirement for online delivery in relation to cl 17.2 of the Operating Guidelines.

342. The Department notes that there are two documents presented by MIBT as evidence in support of the withdrawn outcomes under the Contract, namely a summary of evidence alleged to be the basis of the submission of Training Activity Data and a further document containing a full suite of material on the relevant student. It is submitted that a close examination of both documents demonstrates that they do not evidence that the relevant student Participated in Subsidised Training, within the meaning of the Contract (as discussed above).

343. The Department says that the summary reports reviewed by Mr Newbery represent a statistically significant sample of 347 of the 3538 such reports provided to Mr Newbery (referring to this as the Withdrawn TAD Sample). Accordingly, it is submitted that this amount is representative of the documents received by Mr Newbery. The Department says that, of these summary documents, there are task summary tables that contain the following: the task, date/time commenced, date/time completed and the task outcome. According to Mr Newbery’s review, in some records “[o]f the 347 records reviewed in the Withdrawn TAD Sample, only three (3) records had no Task Summary tasks entered”.

344. Based on a review of the summary documents the Department submits that they do not provide valid or sufficient evidence of the trainer reviewing the work of the student or providing feedback for the student to respond to any other form of communication between the trainer and the student. It is said that any reliance upon cl 17.5 of the Operating Guidelines does not remedy this deficiency, since this clause does not limit the scope of what is required by MIBT for the purposes of record keeping that it consistent with the definition of Participated in Subsidised Training.

345. The Department says that it is not the role of the employer or supervisor to deliver training for the purposes of the Contract; that MIBT is required to be training the student as it is the one that is receiving the subsidy under the Contract. It is said that the requirement within cl 1.8 of the Standards of valid evidence of student interaction and Participation in Subsidised Training requires monitoring of the student, observations, and feedback by the trainer. The Department submits that, (based on the Newbery Report, and separate reviews of random samples from the Withdrawn TAD Sample), the summary documents do not record Participation in Subsidised Training. The critical element that the Department says appears to be lacking is evidence of interaction between the student and the trainer. It is said that such a position does not appear unlikely given the concession of Mr Lawrence that MIBT’s model is akin to “gap training”, which places a higher significance on the employer to train the student than the trainer.

346. As to the more detailed document included in Mr Lawrence’s affidavit of 22 October 2021, (which is asserted to be a compliant document for the purposes of the Contract definition of “Participated in Subsidised Training”), the Department submits that these documents are not necessarily representative of what Mr Lawrence allegedly has in MIBT’s possession. The Department refers to the following entries in that material.

347. First, as to the student identified in Ex of PJL-9 to the affidavit of Mr Lawrence sworn 22 October 2021 (marked Ex G at the hearing) at p 61, the Department says that, for the purposes of completed LMS tasks, section 4: Dismantle Scaffolding, there is no evidence in the communications log at of these matters; there is no evidence in the communications log of the practical task referred to; with respect to the workplace task entries, there is an absence of feedback in the communications log for various tasks, such as alterations, additions, and renovation.

348. Second, as to the student identified in Ex G at p 187, it is said that there is an absence of any feedback in the communications log for the tasks plan and repair; inspect, repair and alter scaffold; and dismantle scaffolding.

349. Third, as to the student identified in Ex G at p 344, it is said that for the course Plan and Prepare there is an absence of feedback in the communications logs at page. Further, with respect to the workplace task entries, there is an absence of feedback in the communications log.

350. The Department accepts that there is at least one student in the documents provided by MIBT that indicates that he has received the delivery of training, namely the student identified in Ex G at p 558 of the communication log but says that, on closer review, that the person writing the message (Marcin Antosz) is not a trainer.

351. It is submitted that these documents do not provide sufficient evidence of trainer and student interaction in the delivery of training, namely Participation in Subsidised Training. The Department notes that during cross-examination, Mr Lawrence conceded that these more comprehensive document would not ordinarily contain feedback from trainers (which the Department says further supports its argument) (check transcript at T 123.21-31).

Determination as to Issue 4

352. I have referred above to the definition of Participation in Subsidised Training and broadly I accept the submissions of MIBT on this issue. It is clear from the material to which I was taken in the larger documents that there was evidence of participation in Subsidised Training (and evidence kept of it) as a general matter. The fact that the Department now considers the quality or content of the training or record keeping is not to the point.

353. I find that MIBT is entitled to the amounts claimed under this item.

Issue 5: Whether the Department is entitled to withhold $131,230 of Training Activity Data uploaded by MIBT, because MIBT failed to submit Training Not Complete data

354. This is dealt with in Ms Nguon’s affidavit at [48](a). Ms Nguon says that the Training Activity Data was rejected on the basis that MIBT failed to finalise the records in accordance with the eReporting Guide.

MIBT’s submissions

355. MIBT says that the Department has not adduced evidence to discharge the onus it bears with respect to this issue. It is said that the cross-examination of Mr Lawrence (at T 105-107 – especially at T 107.4-10, along with T 108 and T 110) is an answer to the Department’s issue in relation to this data. Relevantly, MIBT complains that Ms Nguon has not identified how this figure is calculated (and this complaint has some force having regard to Ms Nguon’s evidence – see T 210.9-44, T 211.5-44).

Department’s submissions

356. The Department has rejected Training Activity Data with a commensurate value overall of $808,757.57 (for reasons other than the position considered above in issue 4 that the evidence does not support the UoC Outcome claimed) namely: for failure to submit Training Activity Data in accordance with the Contract, specifically the eReporting Guide; MIBT’s responses to requests for clarification by the Department that it is said indicated that the Training Activity Data submitted by MIBT was incorrect; and MIBT’s failure to comply with directions to provide clarification or evidence. The first of those (TNC rejections) is raised by issue 5.

357. The Department notes that MIBT must submit Training Activity Data in accordance with the process specified by the Department; and that the process is that if the Training Activity Data is not correctly submitted, it will be rejected. The Department points to cl 18 of the Operating Guidelines which provides that when uploading Training Activity Data to the Department, MIBT must comply with the technical specifications in the eReporting Guide. These specifications include reporting a “TNC” (or Training Not Complete) code in the raw data files which comprise the Training Activity Data.

358. The Department says that the circumstances in which Training Activity Data was rejected because of a failure to report a “TNC” code are as recorded in Tab 5 of the Exhibit to Ms Nguon’s affidavit (marked as Ex 5 in the hearing).

359. The Department points to Mr Lawrence’s explanation of this process during his cross-examination (at T 109.36-45):

Q.    Hypothetically, if there was no response to a TNC data request that data would be rejected, wouldn’t it?

A.   Yes, data gets rejected. But, I’d like to add that when the student is reported then the data is accepted. So, what happens is we upload two to three times a day our AVETMISS reports. So, during the course of that week the student may not have finished. But, by the end of the week we would have finished the data and then upload it in the next report. So, as I explained before, we used to get a error report back from the Department. Students that were 1090 we then changed them to TNC and the ones that weren’t then we fixed what the Department had asked us to do and then re uploaded.

360. The Department says that this evidence demonstrates that it was a valid exercise of the Department’s discretion pursuant to cl 17.4(a) of the Contract to reject data submitted were there was a failure to report TNC data; and that it was expected that the Department would reject this Training Activity Data so that MIBT could subsequently re-upload it.

Determination as to Issue 5

361. I have some difficulty here, in that it is not clear whether this data was re-uploaded. If it was, then it would be rejected. However, in the absence of anything to show that it was re-uploaded, the position here is simply that there was a rejection of data for failure to report a code; and it is not clear from Ms Nguon’s evidence how this figure was calculated.

362. In the absence of evidence as to the value of this “training not complete” data, and the method by which that value was arrived at, I cannot determine this issue in favour of the Department. I find that the Department’s claims as to issue 5 are not made out.

Issue 6: Whether the Department is entitled to withhold $593,562 of Training Activity Data uploaded by MIBT, on account of dates being incorrect in that data

363. This issue is dealt with in Ms Nguon’s affidavit at [48](b), where an example is given of a case where it is said that dates were incorrect as to when the student had actually commenced training in a different activity period.

MIBT’s submissions

364. MIBT points out that the one example referenced by Ms Nguon in her affidavit is the student K. MIBT says that not only does the spreadsheet prepared by Ms Nguon not make good the Department’s claim, but that Mr Lawrence’s cross-examination answered this complaint (see T 112.1-50, 113.1-20).

Department’s submissions

365. The Department submitted that it is entitled to withhold the sum in question. The Department says that, having rejected the data in question, were there no errors with that data one would expect that it would have been re-uploaded and subsequently approved, and that, in the absence of any evidence that such data was re-uploaded, the inference can be drawn that the Department was entitled to reject that data, in accordance with the Contract.

Determination as to Issue 6

366. I do not consider that the Department has here satisfied its onus with respect to issue 6. The Department’s submissions require some degree of reverse engineering. I accept MIBT’s submissions that this complaint is not made good on the evidence, and has been satisfactorily answered by MIBT.

Issue 7: Whether the Department is entitled to withhold $26,887 of Training Activity Data uploaded by MIBT, because MIBT did not respond to clarification sought by the Department within a seven day time frame

367. This is dealt with in Ms Nguon’s affidavit at [48](c)(i). I address it together with issue 8 below. It relates to an automatic rejection for failure to respond to request for clarification in time. Further, the Department complains that, while MIBT provided “evidence” it failed to provide “all evidence” of participation and instead provided summaries of the evidence (see T 73. 25-45). (I interpose here to note that this appears to be another example of MIBT and the Department being at cross-purposes, insofar as the Department failed to specify precisely what evidence it sought, and MIBT sought to provide the most accessible information to the Department, cognisant of the volume of that evidence.)

Issue 8: Whether the Department is entitled to withhold $57,076 of Training Activity Data uploaded by MIBT, because MIBT did not supply any evidence when requested to do so

368. This is dealt with in Ms Nguon’s affidavit at [48](c)(ii). It relates to failure to supply evidence within seven days.

MIBT’s submissions

369. MIBT says that the Department’s contention appears to be that the Department could impose a seven day time limit. MIBT says that there is no contractual support for that.

Department’s submissions

370. As to the rejection for errors in the Training Activity Data, the Department says that it gave MIBT various directions to provide clarification in respect to the Training Activity Data it had submitted (see the requests and MIBT’s responses are recorded in Tab 5 of the Exhibit to Ms Nguon’s affidavit, being Ex 5 and pages 4-52 Ex G).

371. The Department points out that in several instances, MIBT responded to the Department’s request for clarification and those responses requested that the Department rejected the Training Activity Data so it could be resubmitted by MIBT, noting that this was accepted by Mr Lawrence in cross-examination (see above). It is said that there can be no complaint by MIBT that the Department had failed properly to exercise its discretion to reject Training Activity Data in such circumstances, given that the Department was merely doing as MIBT had requested.

372. In other instances, the Department says it exercised its discretion to reject the Training Activity Data submitted by MIBT because MIBT’s responses to the requests for clarification indicated errors with the Training Activity Data submitted. It is noted that, under cl 18.4 of the Operating Guidelines, the start and end dates of a UoC must be accurate. On this basis, it is said that the Department was entitled to reject the Training Activity Data.

373. The Department contends that MIBT’s own evidence establishes that the relevant Training Activity Data did in fact contain errors which meant that the Department was entitled to reject it.

374. As to the rejection based on failure to respond to requests within a specified timeframe, the Department points to cl 13.2(b) of the Contract which provides the Department with a right to direct MIBT to supply any information in relation to the Contact (including Subsidised Training) within a stipulated timeframe. It is said that this empowers the Department to impose a timeframe in which a response to a request for clarification or evidence under sub cll 17.4(a)(i)-(ii).

375. The Department says that, based on the Department’s review of the Training Activity Data submitted by MIBT, the Department has issued directions to MIBT to provide clarification or evidence. The Department says it requested that clarification or evidence because it formed a view (based on its review of that TAD with the assistance of the Department’s systems) that the Training Activity Data may not have been correctly submitted. Those directions specified that, if MIBT failed to provide a response within a stipulated timeframe (between seven and 14 days), the Training Activity Data referable to those requests would be rejected.

376. Tab 6 of the exhibit to Ms Nguon’s affidavit (Ex 5) sets out the Department’s record of the requests for clarification and evidence issued to MIBT and the dates upon which MIBT responded. The Department notes that this spreadsheet also records requests for clarification and evidence made to MIBT in relation to specific students and UoCs which the Department’s records indicate went unanswered.

377. The Department says that Mr Lawrence’s global assertions that MIBT has complied with all the Department’s requests is not borne out on the evidence. Tab 6 is said to demonstrate that there were several instances in which no response was received to the Department’s directions (something said to be accepted in cross-examination). The Department says that MIBT bears the onus in establishing that a response to a request for clarification or evidence has been provided and that MIBT has not provided any evidence of it responding to the requests identified by the Department. It is said that MIBT’s evidence does not satisfy that onus.

Determination as to Issues 7 and 8

378. I am of the opinion that issues 7 and 8 are not made out, and the Department is not entitled to set off the two sums ($26,887 and $57,076) against the amount it owes MIBT. It was not open to the Department arbitrarily to set an end time for the uploading of Training Activity Data to its “Portal” and then to deny any claims supported by data that might otherwise have been available (and hence to refuse payment on that basis). This is further suggestive of the Department and MIBT being at cross-purposes (and that this could have been rectified by the Department providing greater clarity in the terms of the Contract, or through effective communication between the parties).

Issue 9: Whether the Department is entitled to be repaid $230,833 on account of duplicated “CIDs”

379. This issue is dealt with in Ms Nguon’s affidavit at [55]-[72].

MIBT’s submissions

380. MIBT says that the Department has not established its case in relation to overpayments (referring to T 221-222) but that if any aspect of the case is accepted, it is only $82,790 and not $230,833 (referring to T 221.28-35; 222.14-22).

Department’s submissions

381. As to the duplicate CID issue, the Department has identified circumstances in which MIBT has enrolled the same student in the same course pursuant to multiple CIDs.

382. For each CID, MIBT is entitled to claim a Subsidy and Loading calculated in accordance with cll 17.1 and 17.2 of the Contract. Ms Nguon has prepared a spreadsheet identifying the CIDs referable to the Duplicate CIDs issue (at tab 13 of Ex 5) and has listed that amount under the heading “Qualification Price incl. Loadings”. The Department says that there was no challenge to that evidence concerning each student attending the same course with two CIDs; and that, despite the price qualification list not being in evidence, there was no challenge to Ms Nguon that the numbers the subject of that analysis were wrong following her review of that material.

381. It is noted that MIBT is paid Subsidies and Loadings upon reporting Training Activity Data with the sufficient number UoC codes listed in the table in clause 17.3 of the Contract. It is said that having two CIDs in respect of the same student undertaking the same course can result in overpayment.

382. The Department says that this is best demonstrated by the following example from tab 13 of Ex 5, referring a student identified by the Department as having two CIDs: C160537586 (First CID) and C181675180 (Second CID). The qualification price for the First CID was $13,072; for the Second CID it was $5,874.00. The course that the student was studying has 30 UoCs. It is accepted that because the course is an apprenticeship (see the “Program” column), MIBT is entitled to seven milestone payments under the Contract. In the First CID, the student attained a pass (outcome code 20) in 18 UoCs, a withdrawn (outcome code 40) in eight UoCs and has not started (outcome code 85) four UoCs. Because MIBT reported that the student has either attained a pass or a withdrawn in at least 83% of the UoCs referable to the CID, the Department says that MIBT is entitled to claim progress payments in the table at cl 17.3 up to “Apprenticeships Progress 5”. The Department says that this means that MIBT was entitled to (and was paid) all save for the last payment milestone payable for this CID. In the Second CID, the student has attained 18 UoCs as a credit transfer (60) and 12 UoCs as a pass. Considered separately from the first CID, MIBT was entitled to all seven milestones payable for this CID. The Department says that this has resulted in an overpayment in the amount of $3,782.48 (assuming that the withdrawn outcomes were validly claimed); i.e., that MIBT has in effect being able to claim and be paid twice for the eight withdrawn UoCs when MIBT has claimed Subsidies and Loadings once the students are assessed as a Pass.

383. The Department says that the explanation provided by MIBT (that the Department was aware of the fact MIBT had multiple CIDs in respect of the same students studying the same course) does not change the conclusion that MIBT must repay those overpayments. The Department points out that the Contract provides that any funds incorrectly received by MIBT must be repaid to the Department.

384. The Department says that in Ms Nguon’s analysis from the information contained on the Department’s systems, Ms Nguon has adopted two different methodologies: the first assumes that the Department’s findings in relation to the withdrawn outcomes reported by MIBT (if reviewed) would demonstrate that the withdrawn outcomes claimed by MIBT would not be supported by evidence of Participation in Subsidised Training; the second on the assumption that the withdrawn outcomes are accepted.

385. On the first analysis, it is said that MIBT is required to repay the Subsidises and Loadings received by it in relation to the withdrawn outcomes listed in the spreadsheet at tab 13 of Ex 5 to a value calculated at $230,833.24. On the second analysis, it is said that the minimum value of the overpayment (if withdrawn outcomes are accepted) is $82,789.20 (the delta between the qualification price of the first CID in respect of the relevant student and course and the total amount paid to MIBT).

Determination as to Issue 9

388. There is much considerable logic to the Department’s submissions on this issue (which rests on the premise that there is a cap on the amount that can be awarded by way of Subsidies and Loadings for each particular course or qualification). The difficulty is that there is no evidence of the cap for each course.

389. In the circumstances, where I have accepted MIBT’s submissions on the withdrawn outcomes (issue 4) and where there has been no challenge to the premise of the cap for the respective courses (or as to the calculations contained in Ms Nguon’s spreadsheet) I consider it appropriate to adopt the second of the analyses (and hence find that the overpayment in respect of duplicate CIDs is $82,789.20 and is payable to the Department) to be offset against the amounts payable to MIBT.

Issue 10: Whether the Department is entitled to be repaid $174,190 on account of a rollback of payable outcomes

390. This issue is dealt with in Ms Nguon’s affidavit at [73]-[78]. It relates to the Department’s calculation of payments made where the payment milestone was not reached.

MIBT submissions

391. MIBT says that the Department has not established its case in relation to the rollback of overpayments (referring to T 224.1-17, being Ms Nguon’s response to the proposition put to her in cross-examination that she had not identified any basis for the Department’s position as to the rollback, to which she responded “Well it’s a massive database. Unless you wanted to see the database, I can only provide you with a commitment ID, the outcomes the provider would have and look at”.).

Department’s submissions

392. As to rollback of overpayments, It is noted that in Ms Nguon’s evidence she outlines a process whereby she has accessed the Department’s records to determine payments to MIBT that it should not have received based on payment milestones not being reached. Ms Nguon has identified a practice of the Department to run a report concerning the overpayment of subsidies. That process is outlined in Ms Nguon’s evidence, which it is said remained unchallenged during the proceedings.

393. Based on Ms Nguon’s evidence and Mr Lawrence’s failure to present any evidence to rebut the amount of rollback overpayments, it is submitted that this evidence from the Department would be accepted.

Determination as to Issue 10

394. In the absence of any substantive challenge on this issue, I accept the calculations carried out by Ms Nguon and find that the amount repayable to the Department for rollback of overpayments is $174,190.

Issue 11: The quantum of the amounts the Department is entitled to be repaid on account of the repayment obligations admitted by MIBT arising from Operation Fish.

395. This issue is addressed in Ms Nguon’s affidavit at [86]-[89]. There is no issue as to the obligation to repay amounts overpaid by reference to the outcome of the investigations in relation to Operation Fish – just a difference as to the quantum. MIBT contends that the quantum of overpayment is $41,752.16. The Department, on the other hand, has assessed the quantum of this overpayment at $106,994.30.

MIBT’s submissions

396. MIBT submits that the Department has not established its case in relation to the quantum claimed and refers to the evidence that Ms Nguon “doubled up” the figures in various iterations of the spreadsheet provided to her to arrive at the calculation that she did (at T 125.40-50, T 126.1).

Department’s submissions

397. Ms Nguon’s evidence is that she has calculated the value of the overpayment to MIBT by reviewing the Department’s systems to ascertain the value of Subsidies and Loadings actually paid by the Department to MIBT.

398. The Department says that, as explained by Ms Nguon during cross-examination, these figures have been derived by reference to the Department’s databases (which are not readily reducible to documentary form). Mr Lawrence contends that the information to support his table is available on MIBT’s LMS. It is said that there is no evidence to the effect that Mr Lawrence would have any difficulty in providing the source documents from which his table is derived. The Department says that an inference can be drawn that such documents would be readily available, noting: the record keeping obligations imposed on MIBT under the Contract, including in respect of the Subsidised Training provided by it; and the vast quantity of documents from MIBT’s LMS which have been exhibited to affidavits filed on behalf of MIBT in these proceedings.

399. The Department accepts that the evidence before the Court on this issue is less than satisfactory but it maintains that the Court must do the best it can to quantify the loss suffered by the Department based on the documents to which the Department has access to given MIBT’s concession that an overpayment has occurred. I have certainly reviewed those documents to which I have been taken in the course of submissions. However, for obvious reasons I am unable to review documents stored on the Department’s systems (and to which Ms Nguon had reference during the course of her cross-examination).

400. The Department submits that, given that its assessment of the overpayment is referable to the Department’s records of the amounts actually paid to MIBT in respect of the students MIBT has identified as being affected, the Department’s calculation of the figure of $106,994.30 ought be preferred.

Determination as to Issue 11

401. The Department’s contention (see from [61] of the Department’s cross-claim), relevantly, is that MIBT breached the Contract by, inter alia, the Overpayments pleaded at [22]-[26] of the cross-claim (those being the Overpayments identified by the Department as due to Operation Fish). The Department contends that by virtue of MIBT’s breach of contract it has caused the Department loss and damage, that relevantly being particularised as the Overpayments pleaded in the abovementioned paragraphs (see [62]).

402. It was not wholly clear whether the alleged breach (“by” the Overpayments) is contended to be the receipt, per se, of moneys to which the Department says MIBT was not entitled or the failure by MIBT to pay amounts owing pursuant to the Contract by reference to those Overpayments (see cll 23 and 38.6 of the 2018 contract or cll 22 and 36 of the 2019 version of the contract). In either case, absent some consequential loss referable to the loss of use of the money in the interim (of which there was no evidence) it is hard to see what loss the Department has sustained other than the moneys themselves (and it would have its claim for interest on those moneys); and it is for the Department to quantify that loss. If the complaint is as to the accuracy of the information supplied (or compliance with record keeping requirements in general – for example, MIBT’s failure to provide or confirm all students involved in or having caused the Overpayments; see [26](b)) then again it is hard to see what loss has been sustained other than the moneys that were paid out and to which MIBT was not entitled (other than perhaps its exposure to the difficulty of calculating those amounts but on the evidence before me I cannot quantify that by reference to any particular monetary amount nor was it suggested how that might be done). If what is suggested is some kind of loss of opportunity claim (say, loss of the ability to establish the amount of the Overpayments by reference to inadequacy of records or the like) of the kind in which observations as to the need to do one’s best to quantify loss are commonly made (see Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 at 83 per Mason CJ and Dawson; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 at 411-412 per Dixon J (as his Honour then was) and Fullagar J), then all that can be said is that this is not how the claim in the cross-claim is pleaded.

403. Thus, in essence, and having regard to the fact that there is no dispute that the Department is entitled to recover the Overpayments, the only relevant issue is the quantification of those amounts. I accept that the assessment of loss must be done as best as can be done on the material before the Court. However, the difficulty lies in the fact that I cannot assess those of the Department’s records that are not in evidence. I am left in the position that I cannot be satisfied that the loss should be assessed at $106,994.30; and therefore the amount payable by MIBT to the Department under this heading will be the amount conceded by MIBT to be payable (i.e., $41,752.16). (The difference in the scheme of things is not great – $65,242.14.)

COVID payment continuity strategy

404. There is no dispute as to this amount. MIBT has conceded that the Department is entitled to repayment of $413,405.67 in respect of the COVID-19 payment continuity strategy.

Quantum

405. Accordingly, the above findings result in the following amounts being payable to MIBT: $1,446,458.40 (the Withdrawn Outcomes Training Activity Data); $131,230.34 (TNC data); $493,562.72 (rejection for failure to respond to requests for clarification or rejection of reasons); $83,964.64 (rejection for failure to provide evidence following directions from Department), totalling $2,155,216.10; and the following amounts being payable to the Department: $413,405.67 (COVID-19 payment continuity strategy sum); $82,790 (duplicate CID overpayment); $174,190 (rollback of payable outcomes); $41,752.16 (Operation Fish overpayments), totalling $712,137.83. Setting those amounts off against each other, the amount payable to MIBT is $1,443,078.27.

406. It is not necessary to make any findings or orders in relation to the loss allegedly suffered loss due to the Department’s alleged breach of cl 17 and the alleged implied terms of good faith and cooperation in circumstances where the claim now rests on the proposition that these amounts are recoverable as being due under the Contract.

407. I do not consider that the declaratory relief sought by the Department has any utility and therefore will not grant that relief.

Orders Determination

408. For the above reasons I make the following orders:

1. Order that the defendant pay the plaintiff the amount of $1,443,078.27.

2. Subject to any submissions on costs, order that the defendant pay the plaintiff’s costs.

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