Menzies Institute of Technology and Australian Skills Quality Authority - [2019] AATA 343

Menzies Institute of Technology and Australian Skills Quality Authority [2019] AATA 343 (12 February 2019)
Division: GENERAL DIVISION
File Number(s): 2018/7590 & 2018/7592
Re:Menzies Institute of Technology
APPLICANT

AndAustralian Skills Quality Authority
RESPONDENT

DECISION
Tribunal:Member K. Parker
Date:12 February 2019
Date of written reasons: 7 March 2019
Place:Melbourne

On 12 February 2019, at the conclusion of the interlocutory hearing in these matters, and until the final determination of applications for review numbered 2018/7590 and 218/7592 (the Relevant Applications) or as otherwise ordered by the Tribunal, this Tribunal ORDERED:
1.a stay of the decisions of the Australian Skills Quality Authority (ASQA) on 5 December 2018 to cancel the Applicant’s registration as a training organisation under the National Vocational Education and Training Regulator Act 2011(Cth) (NVR Act) and as a registered CRICOS provider under the Education Services for Overseas Students Act 2000 (Cth) (ESOS Act) (Stay Order); and
2.the Stay Order is subject to the following conditions (Stay Conditions):
(a)on and after the date of this order until the final determination of the Applications, the Applicant (by its officers, employees, agents, contractors or other representatives or by any other person or organisation acting on behalf of the Applicant), must not:
i.request, receive or accept from any person (regardless of whether the person is a current or previous student of the Applicant or has not ever been a student of the Applicant), an application form (and if an application form, enquiry or expression of interest is or has already been received from a person, the Applicant is to immediately notify the person in writing that it is not accepting new enrolments or pre-enrolments until further notice); or
ii.request, receive or accept a deposit, instalment or any other payment; or
iii.enrol or pre-enrol any person;

in relation to enrolment or pre-enrolment into any of the Applicant’s courses, including on a deferred basis (namely, where the enrolment is accepted but the course is not scheduled to commence until some later point in time, except where the student was enrolled with the Applicant at or before the date of this Order); and
(b)on and after the date of this order until the final determination of the Applications, the Applicant (by its officers, employees, agents, contractors or other representatives or by any other person or organisation acting on behalf of the Applicant) must not market, promote or advertise its vocational training services or any of its courses in Australia or overseas;
(c)on or before 4 April 2019, the Applicant must lodge with the Tribunal and provide to the Respondent all of its affidavits and submissions in support of the (substantive) Applications including an updated rectification report setting out what it has done to remedy the non-compliances alleged by the ASQA which led to its decision not to renew the Applicant’s registration under the NVR Act and ESOS Act;
(d)the Relevant Applications proceed to a substantive hearing commencing on 5 June 2019; and

3.liberty to apply in relation to the stay ordered in the event that there is a breach of stay conditions or if there is any delay in the Relevant Applications proceeding to a substantive hearing commencing on 5 June 2019, or if the Applicant wishes to press its application made on 8 February 2019 for orders to be made under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth).

The Tribunal DIRECTED:
4.on or before 4 April 2019, the Applicant must lodge with the Tribunal and provide to the Respondent any affidavits and its statement of facts, issues and contentions in support of the Applications and also applications numbered 2018/7591 and 2018/7593 (Set of Four Applications);
5.on or before 24 April 2019, the Applicant and Respondent to attend a private conference at which they will discuss the remaining non-compliances alleged by the ASQA and whether they have been sufficiently addressed by the Applicant by its actions up until the date of the conference;
6.if the Set of Four Applications are not withdrawn as consequence of the private conference on 6 May 2019, the Respondent must lodge with the Tribunal and provide to the Respondent any affidavits and its statement of facts, issues and contentions in respect of the Set of Four Applications;
7.liberty to apply to both parties to allow for either party to request specific documents not provided by either party, as relevant to the Set of Four Applications, in accordance with Directions 1 and 3 above;

the Set of Four Applications listed for substantive hearing commencing at 10am on 5, 6 and 7 June 2019.
The Applicant requested written reasons for the oral decisions. The Tribunal now provides those written reasons.
.....................[sgd]..............................................
Member K. Parker
PRACTICE & PROCEDURE – application to stay decisions not to renew registrations of a vocational education and training organisation – whether stay conditions should be imposed – stay granted subject to conditions which included a prohibition on new enrolments – substantive hearing expedited
Legislation
National Vocational Education and Training Regulator Act 2011 (Cth)
Education Services for Overseas Students Act 2000 (Cth)
Cases
Re Scott and Australian Securities and Investments Commission [2009] AATA 798
Secondary Materials
Standards for Registered Training Organisations 2015
National Code for Providers of Education and Training to Overseas Students 2017
REASONS FOR DECISION
Member K. Parker
7 March 2019

On 5 December 2018 the Australian Skills Quality Authority (ASQA) made the following decisions (the relevant decisions):
(a)to reject an application by Menzies Institute of Technology Pty Ltd (Menzies) to renew its registration as a registered training organisation under the National Vocational Education and Training Regulator Act 2011 (Cth) (NVR Act); and
(b)to reject an application by Menzies to renew its registration as a Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) to overseas students, under the Education Services for Overseas Students Act 2000 (Cth) (ESOS Act).
The relevant decisions were due to take effect on 24 January 2019, that is, the registrations of Menzies as an RTO and as a CRICOS provider were due to expire on that day.
On 21 December 2018, Menzies sought review of the relevant decisions by this Tribunal and made stay applications with respect to the relevant decisions, i.e. applications numbers 2018/7590 and 2018/7592. Two other decisions were made by the ASQA concerning Menzies on 5 December 2018 not to expand the scope of Menzies’s registration. On 21 December 2018 Menzies sought review of those decisions before this Tribunal. They are not subject of the present stay applications.
The parties were not ready to proceed to a hearing of the stay applications at any time before Menzies’s registrations were due to lapse on 24 January 2019. Consequently, the Tribunal put in place an interim stay, solely for the purpose of allowing the parties some further time to file material for the stay hearing, on the condition that Menzies did not issue any certificates of attainment or qualifications to its current students during that time.
The stay applications were heard by this Tribunal on 11 and 12 February 2019.
Menzies relied on the following evidence:
(a)affidavit of the sole director and CEO of Menzies, Dr Uck Han Chun, sworn 23 January 2019 (First Chun Affidavit);
(b)affidavit of Dr Chun sworn 24 January 2019 (Second Chun Affidavit);
(c)further affidavit of Dr Chun sworn 24 January 2019 (Third Chun Affidavit);
(d)affidavit of Dr Chun sworn 8 February 2019, lodged with the Tribunal at the commencement of the stay hearing on 11 February 2019 (Fourth Chun Affidavit);
(e)affidavit of a curriculum and training consultant, Dr Damien Nash, engaged by Menzies (through Mr Nash’s company), sworn 22 January 2019 (Nash’s Affidavit);
(f)affidavit of one of Menzies’s accountants, Mr Ian Shim, sworn 5 February 2019, (Shim Affidavit); and
(g)further downloaded online bank account information lodged by Menzies at the commencement of the stay hearing, as requested by the Tribunal.
Menzies lodged its Outline of Submissions, prepared by counsel, on 24 January 2019 together with a number of legal authorities, which have been considered by the Tribunal.
The ASQA relied upon the following evidence:
(a)an affidavit by an ASQA auditor, Jennine Cochrane, sworn 30 January 2019 (Cochrane Affidavit); and
(b)witness statement, by a former student of Menzies, Hussein Khawari signed 17 January 2019, witnessed by an ASQA investigator (Khawari Witness Statement).
The ASQA lodged its Outline of Submissions with the Tribunal on 6 February 2019.
Preliminary procedural matter
On 12 February 2019, the Tribunal indicated to the parties its concern about a decision taken by Menzies’s legal representatives in the lead up to the stay hearing, to refuse to provide to the ASQA, until it was expressly directed to do so by the Tribunal one business day prior to the stay hearing, certain affidavit exhibits containing financial information and lease documents, over which Menzies claimed confidentiality. At the time, the Tribunal had not made any confidentiality orders in respect of that evidence, nor had Menzies applied for orders to be made by the Tribunal under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) in relation to that information, until it was subsequently prompted to do so by the Tribunal.
By withholding this information from the ASQA in non-compliance with the Tribunal’s earlier direction to each party to provide its materials to the other, and potentially, in breach of its general obligations to cooperate and provide information to the ASQA as the relevant regulator, Menzies put the ASQA at a distinct disadvantage in relation to its preparation for the stay hearing before this Tribunal.
On 11 February 2019, the Tribunal provided the ASQA with an opportunity to apply for an adjournment due to the late service of that material. No such application was made. However, the Tribunal wishes to make an observation for the benefit of future applications heard before it where Menzies’s legal representatives are representing a party: that is, if Menzies does not wish for any of its clients’ evidence to be disclosed, other than to the Tribunal, it is incumbent upon Menzies to immediately apply to the Tribunal for an appropriate order under s 35.
LEGISLATIVE FRAMEWORK
The effect of s 41 of the AAT Act is that unless the Tribunal orders a stay of the operation of a reviewable decision, which it has the power to do under s 41(2), the mere making of an application for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the reviewable decision; in this case, being the decisions not to renew Menzies’s registrations as an RTO or as a CRICOS provider.
Upon request by a party to an application, the Tribunal may order a stay of the application of the reviewable decision under s 41(2) of the AAT Act:
If the Tribunal is of the opinion that it is desirable to do so after taking in to account, the interests of any persons who may be affected by the review.
The Tribunal may make orders:
Staying the decision or part of it, as appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
President Downes J, in Re Scott and Australian Securities and Investments Commission [2009] AATA 798 (Re Scott) set out a number of factors to be considered in determining whether to grant a stay under subsection 41(2) of the AAT Act, as follows:
1. The prospects of success;
2. The consequence for the applicant of the refusal of the stay;
3. The public interest;
4. The consequences for the respondent in carrying out its functions, depending on whether a stay is granted or not;
5. Whether the application for review would be rendered nugatory if a stay were not granted;
6. Other matters that are relevant, amongst which I would include the length of time - in that case, it was the ban - that had already been in place and the gap between today and the hearing of the application.
In the present case, the Tribunal considers that the persons potentially affected by a stay of the relevant decisions, include Menzies, its employees, its contractors, its students, its prospective students and the ASQA. The Tribunal considers that its powers under s 41 of the AAT Act extends to making orders as appropriate for the purpose of securing the effectiveness of the hearing and determining the application for review.
Applying the approach in Re Scott, the Tribunal has identified the following factors it will consider in forming an opinion as to whether it is desirable to order a stay, in relation to the relevant decisions:
(a)the Tribunal’s preliminary impression as to the prospects of success of the relevant application;
(b)the interests of Menzies and the likely consequences of the refusal of the stay on Menzies;
(c)the public interest, incorporating a consideration of the consequences of the stay on the ASQA in carrying out its functions, any potential impact on the reputation on the sector, both domestically and at an international level and any potential impact of prospective employers who are likely to employ graduating students on the basis of the qualifications awarded by Menzies;
(d)the interests of Menzies’s employees and contractors and the consequences of the refusal of a stay on them;
(e)the interests of Menzies’s current and prospective students and the consequences of the refusal of the stay on them;
(f)whether the review application, if successful, would be rendered nugatory or pointless if the stay was not granted; and
(g)the estimated time for the Tribunal to hear and determine the relevant applications.
The Tribunal acknowledges that in considering whether to grant a stay, it is not appropriate to undertake a full consideration of the merits of the substantive applications. There are a number of factual matters in dispute in this case and the evidence before the Tribunal about those matters has not been presented in full and that part of the evidence that is before the Tribunal is, at present, untested. No deponents of the affidavits lodged by the parties gave evidence at the stay hearing.
However, the Tribunal considers that it is able to and that it is appropriate to take in to account the information and evidence presently available to form a general impression as to Menzies’s prospects of success. The Tribunal notes this factor is not solely determinative of whether the Tribunal should permit it to continue to trade as an RTO pending the substantive hearing, as it is required to consider the other factors identified above. The Tribunal will be more inclined to form an opinion that it is desirable to grant the stay if it forms a general impression that Menzies’s prospects of success are good and less inclined to do so if Menzies’s prospects of success are poor.
CONSIDERATION
The prospects of success of the substantive applications
The ASQA contended that Menzies’s prospects of success of the applications were poor. The ASQA contended that Menzies’s response demonstrated that it was not seized of any great urgency to address remediation requirements with a backdrop of RTO’s standing obligations under clauses 2.1 and 2.2 of the Standards for Registered Training Organisations 2015 (Standards), to self-regulate and to ensure its own compliance at all times.
The ASQA contended that despite the undertakings provided by Menzies in its May 2018 remediation plan, it had only taken its compliance obligations seriously in response to the ASQA’s email dated 9 January 2019, when it sought evidence of remedial action that had been undertaken by Menzies, in particular, evidence of the reassessment of units with respect to some its students.
The ASQA stated that it held the following concerns in relation to Menzies continuing to be registered and operating as an RTO and CRICOS provider:
(a)Menzies had not demonstrated that it had ensured compliance with the Standards at all times, or that it systematically monitored its training and assessment strategies and practices to ensure ongoing compliance;
(b)Menzies had indicated that its revised tools were to be used for reassessment. However, ASQA’s review of those tools did not find them to be compliant; and
(c)Menzies had not provided evidence that it had implemented its plan for remedial action within the timeframes indicated, that is, by 31 August 2018. Specifically, Menzies had not identified which students had been impacted and what remedial action had been undertaken.
Menzies does not accept that its prospects of success are poor. In Menzies’s Submissions, it contended that:
The applications for review were not clearly hopeless, indeed, they are prima facie meritorious.
…
Several of the factual matters underlying the allegations made by the ASQA will be disputed.
Menzies contended that it had already engaged in significant rectification work and any outstanding matters were being promptly addressed. It was contended that at the least, Menzies was “well on the way” to substantial compliance with the Standards, seeking to rely upon Mr Nash’s professional opinion in that regard.
The Tribunal has considered the evidence presented to it by both parties in relation to the alleged non-compliances by Menzies. The Tribunal notes that the first audit report issued by the ASQA identified 23 instances of non-compliance with the Standards and eight instances of non-compliance with the National Code for Providers of Education and Training to Overseas Students (Code).
The first audit report was provided to Menzies on 19 April 2018. Menzies engaged Mr Nash to assist it to address the matters raised by the ASQA in this report.
Menzies submitted rectification evidence to the ASQA on 25 May 2018. Included in it, was an undertaking by Menzies that by 30 June 2018 it would revise all of its assessment tools in relation to specified qualifications.[1]
[1] Refer Second Chun Affidavit Exhibit UHC2/383.
In the Second Chun affidavit, Dr Chun stated that the reference to this date was in fact, “inaccurate” and that the tools had been revised prior to submission of the first rectification report in May 2018.
Menzies had not, at any time prior to the date of the Second Chun affidavit, informed the ASQA about this “inaccuracy”. Menzies said it did not hear back from the ASQA following its submission of rectification evidence. Until recently, no follow up was made by Menzies to the ASQA to confirm whether the ASQA considered its proposed remedial action was satisfactory.
The Tribunal notes similar entries in Menzies’s minutes of meeting for its vocational management team for August 2018, September 2018, October 2018 and November 2018, as follows.[2]
Item 5: Current course overview; progress reports on delivery and assessments within each course.
Once ASQA’s response report is received, then we will have further direction and advice on whether our remedial and rectification actions taken are satisfactory or not.
[2] Refer Exhibit “A4”.
On 5 December 2018, the ASQA sent a second audit report to Menzies with its decision not to renew Menzies’s registrations as an RTO and as a CRICOS provider. The second audit report set out the ASQA’s findings that Menzies remained non-compliant with nine provisions of the Standards.

With Mr Nash’s assistance, on or about 18 January 2019, Menzies prepared a report describing certain matters that it proposed to attend to in the coming months, including the reassessments.[3]
[3] Refer Second Chun Affidavit, Exhibit UCH2, pages 409 to 500.
This report identified as follows.
Firstly, for eight of the units being delivered by Menzies, the assessment non-compliance had been identified at audit and Menzies had interviewed all students and reviewed all completed assessments, but no issues had been identified by Menzies. This included units:
(a)involving the inspection and service of automotive braking systems and diagnosis and repair of light vehicle engines;
(b)the provision of support for people living with dementia and complying with infection prevention and control policies and procedures; and
(c)recognising and responding to oral health issues, constructing models and constructing crown and bridge structures.
The Tribunal gained an impression from this part of the report that Menzies held the view that no reassessments for those units were required.
Secondly, for the three units, namely, HLTENN001, HLTENN003 and AURATA005, the report prepared by Menzies conceded that the assessment task did not include sufficient information for learners or assessors; nor did it adequately assess the performance evidence and knowledge evidence requirements of the unit. The report indicated that reassessments would take place by the end of April 2019.
The Second Chun affidavit exhibited a set of emails which were sent by Mr Sam Chun, Menzies’s Head of Operations, on 17 January 2019 (that is, eight months after the first rectification report was issued), to 45 of its students in respect of those three units. Menzies advised the students in this email, as follows:
As part of its quality management processes, Menzies Institute continually monitors the progress of its students and the assessments completed.
We have reviewed our assessment processes and have identified that you have not been assessed to the current industry requirements and some units of competency.
The relevant unit is, in this case, HLTENN003. Continuing:
In order to ensure your skills and knowledge are current and acceptable for industry, we will need to conduct additional assessments in this unit of competency.
This pro forma letter informed the students that additional training sessions would be available from 17 January 2019 to 19 April 2019 and that the practical assessments would take place during, “Final week placement allocation”. It is not apparent from this letter when the final week placement allocation for each student was due to take place.
For two of these units, Dr Chun stated in the Second Chun Affidavit:
With regard to the reassessments for each of HLTENN001 and HLTENN003, I am unable to provide copies of these.
There was no explanation provided as to why Menzies was unable to do so.
Dr Chun was able to provide a bundle of written assessment tasks for the third unit, AURATA005. Some of them indicated they were completed in about August 2018.
Dr Chun stated in the Second Chun Affidavit in January 2019 that Menzies was reluctant to conduct reassessments in respect of the first two units, in circumstances where it had not received confirmation from the ASQA that the ASQA considered the revised assessment tools as being compliant. There was no explanation provided as to why Menzies did not actively seek out such confirmation from the ASQA.
The Tribunal gained an initial impression from the evidence that leading up to the first audit process at the start of 2018, there was a history of complaints having been made to the ASQA against Menzies. Those complaints were reviewed by the ASQA and, in some cases, findings were made that the complaints were either substantiated or partially substantiated. Written warnings were given by the ASQA to Menzies to remind it about its obligations to operate in compliance with the legislation, Standards and the Code.
During that time, Menzies was a sizeable organisation. In the 2018 and 2017 financial year reports, it received significant revenues in the order of $5 million per annum. Against this backdrop, it was not evident to the Tribunal that Menzies had in place a member of staff whose role was dedicated to ensuring that the organisation was, or remained, compliant with its statutory obligations. This struck the Tribunal as somewhat out of place, given that Menzies was operating within a highly regulated sector warranting such attention on an ongoing basis.
For a time, previously, Mr Sam Chun had a title which included in it a reference to compliance. However, the Tribunal’s impression is that this was likely to be window dressing. The Tribunal was informed at the stay hearing that Mr Chun had more recently changed his title to Head of Operations. It was not apparent from the evidence, that Mr Chun had ever held a role, other than being the effective second-in-charge to Dr Chun and acting as the operations manager for Menzies, interfacing on a day-to-day basis with Menzies’s students, teachers and others, rather than actively monitoring the internal compliance processes and checking the training and assessment materials and tools of the organisation.
This impression was reinforced by the fact that only after Menzies had received the first audit report, did it recruit some help by engaging Mr Nash with respect to compliance. The Tribunal notes Mr Nash was disengaged between the time that Menzies submitted its first rectification report and when it received the ASQA’s decision not to renew its registrations on 5 December 2018. This suggests that Menzies’s inclination to use Mr Nash was limited to getting it out of trouble, rather than to proactively ensuring that Menzies was compliant or to make good its previous remediation promises to the ASQA.
The initial impression gained by the Tribunal was that the priority for the RTO has been to minimise costs in order to maximise profits, at the cost of ensuring that it was operating as a compliant RTO, perhaps in hope that if the relevant regulator caught up with it in time, it would be able to remedy the situation at that point.
The evidence suggests, by Menzies’s own admissions, that it is necessary for students to be reassessed with revised assessment tools with respect to some of the units delivered by it. There is also a question mark over whether the assessment tools being used by it in other units are compliant with the Standards.
Menzies delivers courses in the automotive, nursing, aged care and dental sectors. The Tribunal accepts the contention of the ASQA that these are sectors in which it is critically important that the persons being granted qualifications are assured to have the skills and knowledge to carry out their roles in those sectors, so as not to present a risk to persons receiving services in those sectors.
It may be that by the time of the substantive hearing, Menzies can show that all of its assessment tools have been revised and are compliant; all reassessments have been conducted; and that it has established sufficient internal resources and practices to ensure that ongoing monitoring proactively takes place at Menzies through adequate internal resourcing. Based on the submissions made by Menzies’s counsel at the stay hearing, the Tribunal has some confidence that Menzies will endeavour to put itself in a position where it can demonstrate those things at the final hearing. However, given Menzies’s history to date, the Tribunal is careful not to overstate its confidence about this.
The Tribunal’s initial impression is that there are serious concerns about how Menzies has approached compliance and what appears to be a reactive attitude to meeting its compliance obligations in the past. However, there are signs that Dr Chun and Mr Chun now have a greater appreciation of the importance of such matters, which give rise to some hope that things might change.
The Tribunal is satisfied on the basis of its initial impression about this case, that Menzies’s prospects of success are not poor. However, the Tribunal does not consider that Menzies prospects of success could be presently characterised as reasonable or good. By the time of the substantive hearing (planned to take place in June 2019), which is the relevant timing for my consideration, it is possible that Menzies’s evidence may be greatly improved to a point where it could be fairly stated that it has at least reasonable prospects of success. The Tribunal considers that this consideration weighs in favour of granting a stay, but not to the point that the stay should be unconditional.
THE INTERESTS OF MENZIES
Menzies urged the Tribunal to grant an unconditional stay on the basis that, if it is not granted, Menzies is likely to suffer significant and irrecoverable losses. Dr Chun’s evidence suggested that within a number of weeks, if no stay was granted, Menzies would need to consider whether it could continue to operate or whether it would need to be wound up.
At the stay hearing, Menzies contended that if a stay were granted on condition that it was not permitted to continue to enrol new students, it is likely to have to consider winding up within a period of two or three months.
Upon considering the financial information provided by Menzies, there is no doubt that it has significant fixed, ongoing expenses. It has four campuses. Three of them operating from premises owned by unrelated third parties and subject to commercial leases. Those leases are not due to expire for some time. The total lease payments which Menzies is required to pay in relation to those leases is in the vicinity of $80,000 per month.
An audited financial report was provided which indicated that for the year ending 30 June 2018, the monthly wages of Menzies’s employees were in the vicinity of $146,000 per month. This report shows other significant expenditure. It includes advertising and promotion and commissions paid, which taken together, amount to approximately $80,000 per month. The Tribunal is satisfied on the evidence presented to it, that this item of expenditure would not be incurred, or most of it would not be incurred, if the RTO was placed on hold for the time being, with respect to actively recruiting and enrolling new students.
The Tribunal notes that at the end of the 2018 financial year, Menzies’s current assets were recorded to be in the order of $818,000. Menzies had retained earnings at the end of the 30 June 2018 financial year of $2.3 million. Dr Chun provided evidence that $2.3 million of this amount was not readily available to it, as it had been provided as an unsecured loan to a related entity (wholly-owned and controlled by Dr Chun), Menzies Property Management Pty Ltd (MPM).
Dr Chun did not provide a copy of any loan agreement, nor any financial reports or statements to the Tribunal to indicate the financial position of MPM. However, Dr Chun asserts that MPM’s only asset is a commercial property located at 355 Spencer Street, North Melbourne, valued in the vicinity of $4.5 million. Dr Chun gives evidence that the $2.3 million provided to MPM by Menzies, was used to purchase this property. Dr Chun asserted that MPM had a $3 million mortgage in relation to this property and that Menzies paid the mortgage repayments every month on behalf of MPM, in exchange for MPM allowing Menzies to use the premises free of rent to deliver its courses. Dr Chun stated that this was why the sum of $3.25 million was recorded as a “non-current asset” in the financial reports.
Menzies is able to call in this loan. However, in order for MPM to repay it, Dr Chun stated that MPM would be forced to sell the property. Dr Chun suggests it would take a considerable period of time to do so, taking in to account the settlement period; and to do so may result in it being sold at a price below market, if sold in urgent circumstances. It was not explained why MPM would not be able to draw down on the $1.5 million equity in this property in order to repay part of a loan for Menzies.
Dr Chun is also the sole director and controller of another company, which derives revenue under a revenue sharing arrangement with two qualified dentists from the dentist surgery operating rent-free out of one of Menzies’s campuses. As part of this arrangement, Dr Chun stated that Menzies’s students may undertake work placements and/or training at a fully functioning dental surgery.
Taking into account the rent and wage obligations of Menzies alone, the Tribunal appreciates the significant detrimental impact financially on Menzies should it not grant a stay and accepts that Menzies may face insolvency before not too long if it was unable to generate any revenue in the form of tuition fees and was not able to otherwise raise funds by way of loans from other companies wholly owned and controlled by Dr Chun or by way of a shareholder loan from Dr Chun himself, in order to keep Menzies afloat.
However, the Tribunal is not satisfied that Menzies would necessarily face insolvency if the Tribunal were to grant a stay upon condition that there be no new enrolments until the relevant applications are substantively heard and determined by the Tribunal. The Tribunal has indicated to the parties that it is prepared to expedite the applications, so that a hearing may be held in June 2019 with a view to it delivering its decision by the end of August 2019. This is a period of approximately seven months.
The Tribunal is satisfied that while Menzies would lose revenue by not being permitted to enrol new students, that it is likely to manage its affairs to allow it to get by until this application is resolved by either agreement with the ASQA or failing that, by the time the Tribunal hands down its decision in relation to the substantive applications.
The Tribunal considers that there are many items of expenditure referred to in Menzies’s financial reports, which are capable of being trimmed back significantly in the next seven months to allow Menzies to make ends meet.
Further, the Tribunal was not satisfied that Dr Chun would be unable to gain access to temporary finance to enable Menzies to meet its necessary ongoing expenses based on revenue for its currently enrolled students absent any enrolments. Menzies has been operating for over a decade and for the majority of that time has had a large number of student enrolments, propped up by State Government funding until recently (when the State Government decided to cease being a party to a funding contract with Menzies), a decision that the Tribunal notes Menzies did not contest.
Dr Chun expressly refers to the past success of the Menzies’s organisation in his affidavits. The Tribunal is confident that this has generated a significant degree of wealth for Dr Chun, which he has not been required to share with other shareholders; wealth which given his exclusive possession and control he is likely to be able to access, if he elected to do so.
The Tribunal also notes from Menzies’s bank statements that on the same day, on 19 November 2018, an amount of $500,000 was deposited and withdrawn from the account. Menzies’s counsel at the hearing informed the Tribunal, upon instructions from Dr Chun to him, that those funds were paid into Dr Chun’s superannuation fund. It was suggested by Menzies’s counsel that it was possible that rules would apply which would act as restrictions on Dr Chun gaining access to those funds. However, there was no evidence before the Tribunal to confirm those assertions. The Tribunal notes that Dr Chun stated that he had completed his Masters Degree in 1985, providing an indication of Dr Chun’s age. Without being provided with evidence regarding the restrictions that may or may not be present in Dr Chun’s superannuation fund, the Tribunal is not able to discount that Dr Chun may be able to access those moneys should he elect to do so.
Separately, the Tribunal notes from the audited financial report that there is an established practice of granting unsecured loans between Dr Chun’s wholly-owned and controlled entities. Dr Chun did not share information with the Tribunal, other than in respect of MPM, to indicate that there were no funds available to him personally or through his other company that was receiving revenue from the fully operational dental surgery, that would prevent him from continuing his practice of shifting moneys from his company or personal holdings to another, by way of unsecured loans, to Menzies, to make ends meet over the next seven months.
The Tribunal considers that this factor weighs in favour of permitting Menzies to continue to operate as an RTO. The Tribunal does not accept that Menzies is likely to face insolvency if the stay were made conditional upon it not enrolling new students.
The public interest
The principal objects of the ESOS Act include protecting and enhancing Australia’s reputation for quality education and training services.
The objectives of the NRV Act, as set out in s 2A, are to provide for national consistency in the regulation of vocational education and training (VET); to regulate VET using a standard based quality framework and risk assessments where appropriate; to protect and enhance quality, flexibility and innovation in VET and Australia’s reputation for VET nationally and internationally; to provide a regulatory framework that encourages and promotes a VET system that is appropriate to meet Australia’s social and economic needs for a highly educated and skilled population; to protect students undertaking or proposing to undertake Australia’s VET by ensuring the provision of quality VET and to facilitate access to accurate information relating to the quality of VET.
The Tribunal also notes the legislated functions of the ASQA are set out in s 157 of the NVR Act. The ASQA is empowered as the relevant regulator to undertake enforcement action and to make decisions intended to promote and protect the students and the general reputation of the Australian vocational education and training sector both nationally and internationally, and to ensure that registered RTOs and CRICOS providers are operating in compliance with their statutory obligations.
The Tribunal is satisfied that there is a risk that the objectives of the legislative regime may be undermined, including a risk of damage to the reputation of the Australian vocational education and training sector and the risk of undermining and devaluing the qualifications issued by Menzies, if Menzies is unable to address the specific and systematic areas of alleged non-compliance as alleged by the ASQA.
There is also a risk that prospective employers may employ Menzies graduates on the basis of their qualifications, only to discover that those students do not possess the requisite degree of skill and knowledge to undertake the task for which they were employed.
Further, those graduates may undertake their role in a way that may put at risk the persons on the receiving end of healthcare or automotive services.
In these circumstances, the Tribunal considers that the risk of an adverse impact on the public interests identified weighs against the desirability of the Tribunal granting a stay. However, the Tribunal considers that these risks could be effectively reduced by imposing a condition upon Menzies not to enrol new students until the final determination of the application.
The interests of Menzies’s employees and contractors.
The Tribunal has taken into account the evidence in Dr Chun’s affidavit, that Menzies employs 21 staff and that only a small number are employed on a casual basis. The Tribunal accepts that if those arrangements come to an end because a stay is not ordered, those employees and any of its contractors will be affected by an immediate loss of personal income. Those employees may be successful in finding alternative work. There is no guarantee that they may do so. They may be left without a regular source of income, impacting their livelihood.

Accordingly, the Tribunal is satisfied that the impact of Menzies ceasing to trade may have a significant negative impact on its current contractors and employees. This weighs in favour of the desirability of granting a stay.
The interests of Menzies’s students.
The Tribunal acknowledges that if Menzies suddenly ceases to trade as an RTO, this is likely to cause a disruption to students who have already commenced a course, or who are shortly due to commence a courses at Menzies. This would include the temporary disruption of their daily studies. For the majority, if not all of them, who hold student visas, they would stop meeting their visa conditions unless they were able to smoothly transition to another course with an alternative RTO.
However, one possible outcome of the review process is that if Menzies is unsuccessful and the decisions not to renew its registrations are affirmed, an obvious consequence is that it will undermine and devalue any qualifications issued by Menzies between now and the final determination of the relevant applications.
The Tribunal recognises the importance of limiting as much as possible, the total number of students undertaking courses and being issued with qualifications by Menzies, pending the determination of the relevant applications.
The Tribunal considers that this factor weighs against the granting of a stay in respect of persons who have not yet enrolled or paid any fees to Menzies who are presently free to choose an alternative RTO through which to undertake their chosen course.
Whether the review application, if successful, would be rendered nugatory or pointless if the stay was not granted
As previously indicated, the Tribunal is satisfied on the evidence before it that Menzies is unlikely to be able to sustain itself financially between now and the final determination of this matter using its current cash reserves if it ceases all operations. For this reason, the Tribunal considers that the applications would be rendered nugatory or pointless, if the stay was not granted. This weighs in factor of granting a stay. However, for the reasons set out above; the Tribunal is not satisfied that Menzies will face insolvency if a condition is imposed on the stay prohibiting the new enrolments pending determination of the applications.
The estimated time for the Tribunal to hear and determine the applications
The Tribunal considers that this factor weighs in favour of granting the stay as the expected time before these applications will be determined has been truncated to approximately seven months due to the Tribunal being prepared to expedite the hearing. The parties have undertaken to prepare this case for hearing on an expedited basis.
CONCLUSION
Weighing up the different considerations and following review of the evidence and submissions presented, the Tribunal has decided to grant the stay, subject to a number of stay conditions pursuant to the Orders and Directions made by this Tribunal on 12 February 2019.
REQUEST FOR STAY OF STAY CONDITIONS MADE AT THE CONCLUSION OF THE STAY HEARING
Upon conclusion of the Tribunal handing down its oral decision in relation to Menzies’s stay applications, Menzies’s counsel made a request to the Tribunal to order an interim stay for a period of 14 days to stay its own stay conditions that it had imposed on the stay ordered on 12 February 2019. The transcript of the hearing on 12 February 2019 is set out below (as relevant):
MR SOLOMON-BRIDGE: …The third matter is I apply for an interim stay of the conditions that you impose, Tribunal. It would be for a very short period, what I propose is 14 days. Obviously I don’t have instructions to appeal. I have to advise the client together with my instructors about all of the issues that may or may not arise from your reasons but I am instructed to at least take those instructions and to that effect have an interim stay sought by you.
I acknowledge in the reasons that you’ve just given all the matters you’ve relied upon for why there should be those conditions imposed. In my respectful submission, suspending those conditions for 14 days is - or the balance of convenience favours that very short interim stay while the applicant takes instructions about what it might do. And, of course, 14 days would ensure a very prompt election of whether to appeal and, if so, to hopefully get before a Justice so that the stay could then be decided on a - so that any other further stay could be decided on an interlocutory basis by the justice.
So it’s really just a stop gap measure, if I can put it that way, should the applicant be advised that that’s the course it wishes to take. So I respectfully that application in respect of the conditions that were imposed on - but if you were disposed to entertain or make that order I can perhaps try and frame it more (indistinct), so that it can be in a form that’s suitable to be drawn up as an order. But I would imagine it would be along the lines of pronouncing the orders that you’ve made now and then having as a final order an item to the effect that orders X and Y, which would, of course, be those corresponding to the conditions, be further stayed for a period of 14 days. I think that would probably be a sufficient form but again, of course, that presupposes that you might be disposed to grant that.
…
MR SOLOMON-BRIDGE: Yes. Just in relation to the first application that I made, well, the (indistinct) application for interim stay. And, of course, would it be of any assistance to - well, in my submission given the interim nature of it it’s not really appropriate for me to engage in what may or may not be the prospects of (indistinct) - - -
…
I was actually referring to the application for the interim stay and what I wished to convey was, in my submission, because of the interim nature I needn’t address you on what might be the prospects of success of any - of those proposed appeal points or what have you. Of course, we’ve only just had the reasons given now, so I just wanted to clarify that I didn’t intend to address you on - - -
MEMBER: It would be highly unusual - - -
MR SOLOMON-BRIDGE: - - - the merits of that and rather have you dispose of the (indistinct).
MEMBER: Yes, I’ll hear from Mr Grullemans about that but it would be highly irregular for me to start to go into hearing an application and to hear about what you think your chances are of appealing my decision.
MR GRULLEMANS: Look, Member, I’d just like to invite my learned friend to identify what source of power under the Administrative Appeals Tribunal Act there is for an application for an interim stay.
MR SOLOMON-BRIDGE: Yes.
MR GRULLEMANS: That’s the application sought.
MR SOLOMON-BRIDGE: Is that an invitation to respond now or do you wish me to wait until Mr Grullemans has finished his response?
MR GRULLEMANS: Well, I’ll have more to say. I think if we just clarify the power that you rely on because I don’t think there is a power in the Act for an interim stay as you characterise it.
MR SOLOMON-BRIDGE: Yes. So the submission is put on three alternative bases. First, under the power of 41(2), that in circumstances such as this the source of - or the statutory power there might extend in an appropriate case to securing the effectiveness of the AAT hearing by way of preserving any appeal rights to the Federal Court in order to have what was originally put before the AAT on the same grounds that the hearing be effectively preserved. I’ve said that in a roundabout way, I hope it’s been understood. But effectively that’s the power relied upon in the first alternative.
Secondly, the general procedural power of the Tribunal, including section 33 I think it is of the AAT Act I rely upon as embracing the sort of application I made a moment ago. And in the third alternative, of course, in my submission, that a statutory body such as this would have the necessary implied powers to protect its processes. And, of course, the whole purpose of the stay application, which has been partially successful was to preserve the effectiveness of the review that was taking place in the Tribunal and I understand the Tribunal has formed a view about what’s desirable and the particular circumstances.
But, in my submission, that doesn’t denude or take away the ability of the Tribunal in an appropriate case and on a very interim basis to allow an applicant in these circumstances to pursue appeal (indistinct) of the view that to protect the effectiveness of the hearing that interim position ought to be preserved. So they’re the three alternative bases. I’m happy for Mr Grullemans to address you on that.
MEMBER: Look, it’s not necessary. I’ve considered the application that you have sought to make and I don’t consider it appropriate to in any way give you a stay on the stay that I’ve just made or on the condition of the stay. Of course, it’s open to your client to take whatever steps it wishes to do now in relation to the decision I’ve made and to seek relief elsewhere.
Putting aside the issue of whether the Tribunal has jurisdiction to entertain the application that was made by Menzies (a point raised by the ASQA), the Tribunal does not consider it appropriate to order an interim stay of stay conditions of a conditional stay that it has granted. The stay conditions, by their very nature and for the reasons outlined in these reasons for decision, were integral to the preparedness of this Tribunal to grant a stay of the relevant decisions.

I certify that the preceding eighty eight (88) paragraphs are a true copy of the reasons for the decision herein of Member K Parker.

[sgd]........................................................................
Associate
7 March 2019
Dates of stay hearing:  11 & 12 February 2019
Date of oral decision:   12 February 2018
Advocate for Applicant:  Mr A Solomon-Bridge of Counsel
Solicitors for Applicant:  Marshalls & Dent & Wilmoth Lawyers
Advocate for Respondent:                 Mr Adam Grullemans, Legal Officer, ASQA