Merage Group Pty Ltd and Australian Skills Quality Authority
[2019] AATA 713
•15 February 2019
Merage Group Pty Ltd and Australian Skills Quality Authority [2019] AATA 713 (15 February 2019)
Division:GENERAL DIVISION
File Number(s): 2019/0464; 2019/0465; 2019/0466
Re:Merage Group Pty Ltd
APPLICANT
AndAustralian Skills Quality Authority
RESPONDENT
DECISION
Tribunal:The Hon. Dennis Cowdroy OAM QC, Deputy President
Date:15 February 2019
Date of written reasons: 16 April 2019
Place:Sydney
For the reasons given orally on 15 February 2019, Merage Group Pty Ltd’s Application for a Stay Order pursuant to section 41 of the Administrative Appeals Tribunal Act 1975 (Cth), is refused.
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The Hon. Dennis Cowdroy OAM QC, Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – application to stay decision of Australian Skills Quality Authority – registered training organisation – decision to cancel registration – factors relevant to the granting of a stay – maintenance of standards for education and training – protection of students – insufficient evidence of financial impact – stay application refused
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 41
Education Services for Overseas Students Act 2000 (Cth) ss 83, 93
National Vocational Education and Training Regulator Act 2011 (Cth) ss 2A, 3, 16, 35, 35A, 36, 37, 38
CASES
Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) 2 NSWLR 685
Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal [2009] 181 FCR 130
Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164
Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37
Burriss v Hallit [2014] NSWCATAP 39
‘Confidential’ and Australian Prudential Regulation Authority [2002] AATA 1346
Glad Retail Cleaning Pty Ltd v Alvarenga [2013] NSWCA 289
Re Australian Institute of Technical Training Pty Ltd and Minister for Education and Training [2018] AATA 1281
Re Griffiths & Grif-Air Helicopters Pty Ltd and Civil Aviation Authority (1993) 31 ALD 380
Re Scott and Australian Securities and Investments Commission [2009] AATA 798
Re Sher-E-Punjab Pty Ltd and Australian Skills Quality Authority [2018] AATA 46
Re Young and Secretary, Department of Agriculture, Fisheries and Forestry [2002] AATA 1231
SAS Realty Developments Pty Ltd v Kerr [2012] NSWCA 233
Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047VBJ and Australian Prudential Regulatory Authority (2005) 87 ALD 747
WRITTEN REASONS FOR ORAL DECISION
The Hon. Dennis Cowdroy OAM QC, Deputy President
16 April 2019
INTRODUCTION
Before the Tribunal is an application brought, pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”), for a stay of two decisions made by the respondent, the Australian Skills Quality Authority (“ASQA”).
Merage Group Pty Ltd was first registered in 2003. It carries on its business under the business name of MIS Global Technologies. The purpose of the business was originally to provide IT training, and it provided services to Microsoft Cisco and other technology companies.
On 19 January 2011 the applicant became registered as a registered training organisation (“RTO”), under the provisions of the National Vocational Education and Training Regulator Act 2011 (Cth) (“the NVR Act”). Section 3 of that Act defines registered training organisation as follows:
“Registered training organisation” means a training organisation listed on the National Register as a registered training organisation.
The VET Regulator is defined in section 3 of the NVR Act as:
(a) the National VET Regulator; and
(b) a body of non-referring State that is responsible for the kinds of matters dealt with by this Act.
Application for registration as an RTO must be made to the respondent, as the National VET regulator, pursuant to section 16(1) of the NVR Act. The respondent has the statutory function of ensuring, inter alia, the maintenance of standards by educational providers. Pursuant to section 17(1) of the Act:
The National VET regulator may grant an application for registration.
In doing so it must determine whether the applicant complies with the requirements set out in section 17(2), namely the:
(a) VET Quality Framework; and
(b) the applicable conditions for registration as set out in Subdivision B of Division 1 of the Act.
Division 3 is entitled:
Ensuring compliance with the VET Quality Framework.
Subdivision A is entitled, “Audits”.
Section 35(1) empowers the National VET Regulator to conduct audits of an NVR registered training organisation’s operations to assess whether the organisation continues to comply with the Act.
Under section 35A the National VET Regulator may give directions to rectify breaches. Subdivision B is entitled, “Administrative Sanctions”.
The objects of the NVR Act are set out in paragraph 2A of the Act. They are stated to be:
(a) to provide for national consistency in the regulation of vocational education and training (VET); and
(b) to regulate VET using:
(i) a standards-based quality framework; and
(ii) risk assessments where appropriate; and
(c) to protect and enhance:
(i) quality, flexibility and innovation in VET; and
(ii) Australia’s reputation for VET nationally and internationally; and
(d) 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; and
(e) to protect students undertaking or proposing to undertake Australian VET by ensuring the provision of quality VET; and
(f) to facilitate access to accurate information relating to the quality of VET.
The NVR Act provides powers to enforce sanctions: see section 36. The sanctions may include suspension of:
All or part of an NVR registered training organisation’s scope of registration.
For suspension, see section 36(2)(e) and also section 38. Cancellation of registration is possible under section 36(2)(f). See also section 39.
HISTORY
On 14 December 2016 the Regulator, in the exercise of power under section 37 of the NVR Act, gave the applicant notice that it intended to cancel the registration of the applicant pursuant to sections 36(2)(f) and 39. The applicant was to provide a response by 31 January 2017.
On 29 March 2017 the Regulator determined that the applicant was not compliant with the VET Quality Framework. It determined not to cancel the registration but to suspend the operation of all of the applicant’s scope of registration under sections 36(2)(e) and section 38. Various directions were made requiring the applicant to demonstrate that it had rectified the defects which had been identified in its operations.
On 23 July 2018 the Regulator gave notice under section 37(1)(a) of the NVR Act that it intended to make a decision to cancel the applicant’s registration under section 39. Such notice, as provided for by section 37(1)(b), invited the applicant to give the Regulator a written response by no later than 20 August 2018. On the same date, in accordance with the provisions of sections 83(3) and 93(2) of the Education Services for Overseas Students Act 2000 (Cth) (the “ESOS Act”), the Regulator gave notice that it proposed to cancel the applicant’s registration for all courses at all locations.
On 20 August 2018 the Regulator received a response to its two notices. Having considered the response the Regulator considered that there were still deficiencies which it had identified. Accordingly, by letters dated 15 January 2019, the Regulator gave notice of its decision under the provisions of the ESOS Act to cancel the applicant’s registration for all courses at all locations. Simultaneously, it gave notice of its decision to cancel the applicant’s registration under section 39 the NVR Act.
On 29 January 2019 the applicant filed its application for review in this Tribunal. On the same day the applicant made an application for a stay pursuant to section 41(2) of the AAT Act. This is the application which is currently before the Tribunal.
THE APPLICANT’S SUBMISSIONS
In support of its application for a stay the applicant has filed a statement of Abdul Malek Ebrahimi dated 11 February 2019, to which is attached numerous annexures. The statement recites the history of the business and how it has grown. There are references to the fact that there was to be:
“…continued improvement of our campus, which was planned for December and January 2019. We commenced a major upgrade to our facilities. This upgrade involved purchasing new furniture and IT infrastructure. The equipment includes the purchase of students’ chairs, desks, switches, routers, data cabling totalling $38,266.”
The statement also refers to the applicant’s awareness of the need to comply with the statutory requirements and how it has engaged an expert, Ms Judith Bowler, to assist in providing expert advice. The statement also refers to the fact that notices have been sent to its students advising of the findings of the audit process and states:
“Should we be allowed by the Tribunal to complete this Remediation, I will proceed to send an email to all affected students, with a subsequent follow up phone call if needed, and to commence all the required remedial actions.”
In respect of financial matters, the applicant disclosed that it has $94,402 in a company bank account. An unsigned BAS certificate for the current quarter was provided. Mr Ebrahimi stated:
“If a stay is not granted I disclose that we will not be able to sustain our operations for more than two months.”
OFFER OF COMPROMISE
The applicant does not dispute that there is non-compliance with the operation of its courses. Accordingly, it has proposed that a conditional stay be imposed on the basis that, inter alia, it does not enrol any further students, that it emails the students to inform them of any remediation work, that its records be made available for inspection by the Regulator, and that a progress report of rectification and remediation be provided to the Regulator.
Such proposal is not acceptable to the respondent.
PRINCIPLES
The power to impose a stay is, as already referred to, contained in section 41(2) of the AAT Act. Significantly, before a stay is granted the Tribunal must determine whether it is of the opinion that it is “desirable” to do so after taking into account the interests of any persons who may be affected by the review. It has been held that the consideration which must be foremost in the Tribunal’s consideration is the scheme embodied by the relevant legislation.
In Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal [2009] 181 FCR 130 at [52], the Full Court of the Federal Court stated:
“The context set by that scheme is a ‘fundamental element’ in the formation of the opinion according to law.”
The Tribunal also observes that the operation of section 41(2) of the AAT Act must include consideration of the persons whose interests are to be taken into account by the parliament in giving the decision-maker power to make the decision as part of its regulatory role: VBJ and Australian Prudential Regulatory Authority (2005) 87 ALD 747 at [42].
The Tribunal has determined that the following considerations must be taken into account when determining whether to exercise the power generally to grant a stay.
1. The prospects of success
2. The consequences for the applicant of the refusal of a stay
3. The public interest
4. The consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not
5. Whether the application for review would be rendered nugatory if a stay were not granted; and
6. Other matters that are relevant include the length of time that the ban has been in place already and the gap between the day of the application and the day of the hearing of the application.
Such principles were stated in Re Scott and Australian Securities and Investments Commission [2009] AATA 798. The same considerations have been referred to in Re Griffiths & Grif-Air Helicopters Pty Ltd and Civil Aviation Authority (1993) 31 ALD 380. Similar observations were made by the Full Court of the Federal Court of Australia in Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164. The principles have also been adopted in state courts, for example, see Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) 2 NSWLR 685 at 693-694, 695; SAS Realty Developments Pty Ltd v Kerr [2012] NSWCA 233; Glad Retail Cleaning Pty Ltd v Alvarenga [2013] NSWCA 289 at [25]. The same principles have also been adopted in New South Wales Tribunals: for example, Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37 at [7] to [9]; Burriss v Hallit [2014] NSWCATAP 39 at [11] to [13].
The Tribunal has recognised that hardship may arise involving a private applicant and that public and private interests must often be weighed together: for example Re Young and Secretary, Department of Agriculture, Fisheries and Forestry [2002] AATA 1231; ‘Confidential’ and Australian Prudential Regulation Authority [2002] AATA 1346. In the latter case a stay was refused because it was considered that the applicant’s own conduct had contributed to its failure to obtain a licence within the requisite time to continue its business, and the prospects of success in a substantive application of principles were weak.
The Tribunal is informed that the cancellation results in the fact that the applicant has been non-compliant with the requirements of the Regulator since December 2016. Despite attempts by the Regulator to ensure compliance, which attempts continued throughout 2017 and 2018, the applicant remains non-compliant. Notice of intention to cancel the registration was given on 23 July 2018. The applicant did provide some information by 20 August 2018, but it failed to satisfy the Regulator that the deficiencies had been rectified.
The audit conducted by the Regulator in December 2016 revealed the deficiencies in the conduct of the operations of the applicant. The Regulator states that those deficiencies remain unresolved. Throughout this period the applicant has been enrolling students for a variety of courses. The courses are as follows, and the approximate cost:
(a)Certificate IV in Information Technology Networking: the cost is approximately $8000; 13 students are enrolled for this course;
(b)Diploma of Information Technology Networking: the cost is $9500 and 112 students are enrolled in this course;
(c)Diploma of Business Administration: the cost is $10,990 and there are 19 students enrolled in this course;
(d)Advanced Diploma of Business: the cost is $11,590 and there are six students enrolled in the course; and
(e)Diploma of Early Childhood Education and Care: the cost for this course is $16,500 and 41 students are enrolled in this course.
The financial records suggest that from July 2018 until the present, approximately $1.5 million has been received by the applicant in respect of fees paid by the students enrolled by the applicant. The respondent, as regulator of the educational training programs, has a statutory responsibility, as is already observed, to ensure that those who are registered comply with the requirements for education and training.
Other evidence suggests that 281 international students are ready to commence education at the college and deposits have been taken from students by the applicant for such courses. A further 147 international students have not yet had their visas approved. Such students enrolled at the college on the basis that the courses provided have been approved by the regulator and their education, for which they pay fees, will be in accordance with the training programs which are advertised. In fact the education which they will receive does not comply with the requirements of the Regulator.
The applicant has known of these deficiencies for many months, and it has been put on clear notice since July 2018 of the deficiencies which would lead to the cancellation of its accreditation.
The scheme of the NVR Act discloses the fundamental purpose of ASQA, namely to ensure the maintenance of appropriate standards in institutions which are certified by it and by their acceptance on the register. The maintenance of Australia’s reputation for quality education and training is also paramount.
The purpose of the NVR Act also is to protect students who are consumers of the courses offered by the registered providers. Should there be a lapse in the standards of tuition or training the fees, which they have paid, such fees have been paid on a false premise unless the courses offered meet the required standards. Often a provider is unable to refund such fees. For authorities concerning the applicability of a particular NVR Act, see ReSher-E-Punjab Pty Ltd and Australian Skills Quality Authority [2018] AATA 46 at [102]-[110], and ReAustralian Institute of Technical Training Pty Ltd and Minister for Education and Training [2018] AATA 1281 at [57].
By virtue of the legislation, in balancing the interests which are competing, namely the interests of the applicant, and of the students, priority must be afforded to those whose interests are protected in the statutory scheme. See Australian Securities and Investments Commission (ASIC) and the Administrative Appeals Tribunal [2009] 181 FCR 130 to which reference has already been made.
The statement of Mr Ebrahimi states that an expert, Ms Judith Bowler, has been retained to assist the college. However the evidence establishes that she was not consulted until after receipt of the notice of cancellation in January 2019.
The statement of Mr Ebrahimi attaches invoices for the expenses which he states are being expended to improve the facilities. However all the invoices postdate the receipt of the cancellation notice.
His statement proposes a remediation program. The Tribunal is not satisfied that the proposals would satisfy the requirements of the Regulator. The proposals are, to say the least, vague and imprecise.
When the applicant provided information to the Regulator on 20 August 2018 it failed to comply with the requirements of the Regulator in numerous respects. Whilst Mr Ebrahimi states that the college can continue for a further two months, if a stay is not granted, the evidence concerning the financial viability is imprecise and vague. No sworn evidence has been provided as to the financial status, nor whether Mr Ebrahimi himself can provide the finance to ensure the continuation of the college, were a stay not granted.
In this case the Tribunal questions the financial viability as alleged. In Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047 at [97] the Tribunal Member said:
“Given the unexplained failure to introduce into evidence before the Tribunal proper financial statements, accounts and/or tax returns, the Tribunal must consider what the consequences of that failure are, and whether any, and if so what inferences can be drawn from such failure.”
The statement of Mr Ebrahimi does attach some financial data, but it is too vague to form any concluded opinion. As mentioned, the BAS statement put forward is not audited, nor is it signed by any auditor. There is a profit and loss account, which again does not bear the hallmarks of having been prepared by an auditor and it is certainly not signed by an auditor.
CONCLUSIONS
The matter of primary importance in this application is whether the objects of the NVR Act are being carried out. The evidence establishes that they are not, and this conclusion is not disputed by the applicant. The consequences for the refusal of a stay would result in inconvenience to the students who are enrolled, however they will be able to undertake their courses at another institution if the applicant is unable to provide the courses it advertises.
The interests of the students are paramount. They are entitled to expect and the Regulator must ensure that the courses which are offered by any educational facility under its control fulfil their course requirements. The Regulator is required to suspend or cancel registration of an RTO where the courses fail to be compliant.
There is a public interest element in this application, namely the confidence that any education facility, under the control of the NVR Act, is fulfilling its statutory purpose, and that the Regulator is fulfilling its statutory functions. The Tribunal considers that in view of the demonstrated and unchallenged failings in the courses being provided, and of the length of time which has elapsed, and the applicant has had every opportunity to rectify the defects and has failed to do so, a stay should not be granted.
Accordingly, the application for the stay is refused.
I certify that the preceding 47 (forty-seven) paragraphs are a true copy of the reasons for the decision herein of The Hon. Dennis Cowdroy OAM QC, Deputy President
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Associate
Dated: 16 April 2019
Date(s) of hearing: 15 February 2019 Solicitors for the Applicant: Mr P Doukas, Denison Toyer Pty Ltd Solicitors for the Respondent: Ms L McDermott, Australian Skills Quality Authority
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