Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training - [2018] AATA 2706

Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706 (7 August 2018)
Division:GENERAL DIVISION
File Number 2017/3488
Re:Moonlight Family Day Care Pty Ltd
APPLICANT

Secretary, Department of Education and Training And
RESPONDENT

DECISION
Tribunal:Dr Damien Cremean, Senior Member
Date:7 August 2018
Place:Melbourne

The Tribunal affirms the decision under review.
[sgd]........................................................................
Dr Damien Cremean, Senior Member

SOCIAL WELFARE—Child Care Benefits approval —admitted breaches by provider----appropriate sanction—cancellation of approval—decision affirmed.
Legislation
A New Tax System (Family Assistance)(Administration) Act 1999(Cth) ss 174,176,196, 200(1)(e), 219N, 219QB, 219QE
Cases
Re Pananga Pty Ltd and Secretary, Dept of Education, Employment and Workplace Relations [2010] AATA 757
Secondary Materials
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Cth) s 16(1)
REASONS FOR DECISION
Dr Damien Cremean, Senior Member
7 August 2018

The Applicant is Moonlight Family Day Care Centre Pty Ltd (‘Moonlight’) and it seeks review of a decision made on 12 December 2016 to cancel its Child Care Benefit (‘CCB’) approval.
The decision was made under s 200(1)(e) of the A New Tax System (Family Assistance) (Administration ) Act 1999 (Cth) (‘Act’), which provides :
Sanctions
(1) If the Secretary is satisfied that an approved child care service has not complied, or is not complying, with a condition for the continued approval of the service, the Secretary may do one or more of the following:
…..
(e) cancel the service’s approval;
The decision was affirmed on internal review by an Authorised Review Officer (‘ARO’) on 18 May 2017.
The ARO provided detailed Reasons for Review Decision and stated that he was satisfied under s 200(1)(e) of the Act that Moonlight has not complied with all applicable requirements imposed by a law of the Commonwealth relating to child care.
Specifically, the ARO stated that Moonlight had not complied with eligibility requirements in the way required by s 196(1) of the Act or with the family assistance law in the way required by s 196(2) of the Act.
Section 196 of the Act states:
Eligibility requirements
(1) It is a condition for the continued approval of an approved child care service that the service satisfies any eligibility rules that are from time to time applicable to the service under paragraph 205(1)(b).
Compliance with family assistance law
(2) It is a condition for the continued approval of an approved child care service that the service not contravene an obligation imposed on the service by the family assistance law (whether or not such a contravention constitutes an offence or is of a civil penalty provision).
Further, the ARO stated that Moonlight failed to comply with its obligation to provide accurate information to the Department as to whether sessions of child care have occurred and the details of those sessions in its reports under s 219N of the Act, which provides that a child care service must give to the Secretary a report for each week in which a session of care is provided. Sections 219N(3)-(4) further stipulate that the report must be made in the form, and in the manner or way, approved by the Secretary and must include the relevant information required by the Secretary.
Specifically, in that regard the ARO stated that Moonlight had made false statements in respect of at least 7750 sessions of care in its s 219N reports and had been reckless as to whether those statements were false or not, thereby contravening s 174(1) of the Act, which states:
(1) A person contravenes this subsection if:
(a)the person makes a statement or presents a document to an officer or an approved child care service exercising powers, or performing duties or functions, under the family assistance law; and
(b) the statement or document is false in any particular; and
(c) the person is reckless as to whether the statement or document is false in any particular.
As a result, Moonlight has obtained payments in respect of fee reduction and child care rebate and the ARO asserts the circumstances indicate at least recklessness on its part as to the accuracy of the reports, thereby contravening s 176(3) of the Act.
As a result of inaccurately reporting attendances, according to the ARO Moonlight has received amounts of child care benefit that should have been remitted to the Respondent but were not in contravention of ss 219QB and 219QE of the Act.
In consequence, in the ARO’s view, the number, frequency and ongoing nature of the service’s contraventions represent a significant failure of governance and a poor record of compliance with the family assistance law.
This, says the ARO, means that Moonlight is not a suitable person to operate a child care service and has failed to demonstrate continuing compliance with Part 2 of the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000, in particular with s 16(1) of such Determination.
SUBMISSIONS AND CONSIDERATION
At the hearing of this matter, Moonlight was represented by Mr Boden, solicitor, who sought to argue that, although there were errors and shortcomings in its dealings with the Department, it nonetheless should not have its CCB approval cancelled. Indeed, in his submissions he explained that Moonlight does not take exception to any of the allegations of breach made against it. In such circumstances, it is appropriate to make findings that each of the breaches is established.
Mr Boden sought to explain Moonlight’s conduct by referring to various facts and considerations with a view to submitting that some other sanction or penalty such as suspension should apply and not cancellation. In relation to the false statements made in respect of at least 7750 sessions of care in its s 219N reports, Mr Boden submitted that despite appearing to be a significant number of sessions, this amounted to only two weeks of care.
Furthermore, Mr Boden submitted that the decision to cancel the approval was disproportionate to the alleged failures. Conversely, Mr Boden contended that another more appropriate sanction which does not involve cancellation of the approval should be imposed. In making this submission, Mr Boden asked the Tribunal to take into account the percentage of incorrectly reported sessions relative to the total amount of sessions provided. He also pointed to the director’s qualifications, experience and ability to manage Moonlight prior to the cancellation in support of this, by outlining the service’s delivery history.
These submissions were opposed by Mr Hertzberg, the solicitor who appeared on behalf of the Respondent, who pointed to the seriousness of the admitted breaches. In making this submission, I was referred by the Respondent to the matter of Re Pananga Pty Ltd and Secretary, Dept of Education, Employment and Workplace Relations [2010] AATA 757 (‘Pananga’). In Pananga, the Tribunal considered whether the decision to cancel the Applicant’s child care service was justified on the basis that the service refused to provide various types of information to the Secretary, including information about enrolments, in an electronic format.
Further, at [24] Deputy President Hack and Senior Member Carstairs stated:
A breach which is constituted by a wilful refusal to provide information electronically cannot be regarded as anything other than serious…There was, however, no suggestion that the breach might threaten the safety of children for whom care was provided.
In making his submission to the Tribunal Mr Hertzberg sought to draw a distinction from Pananga, contending that comparatively the matter at hand is far more serious, involves far more wide ranging and frequent contraventions and also raises an issue about the health and safety of children. The Respondent pointed to Moonlight’s attempts to downplay the seriousness of their conduct in contending that the 7750 sessions of care was only a small percentage of all sessions of care. On the contrary, Mr Hertzberg submitted that Moonlight’s breaches involved a very serious instance of a child care service admitting that it doesn’t have the governance arrangements in place that it needs to…and that it has obtained large amounts of money through inaccurate reporting.
In making his submission in relation to the Respondent’s comments concerning the application of Pananga, Mr Boden sought to distinguish the facts, pointing to an absence of a clear direction from the Department which the child care service has refused to accept, as was the case in Pananga. Mr Boden submitted that it’s not the position here that we have, at any point in time, refused to either cooperate or implement a direction or decision made by the department.
I have considered carefully the submissions made on behalf of both parties but in the end I have decided it is appropriate to affirm the decision under review. It is true Moonlight has admitted the breaches, which must be taken into account, and it seems true also that it has taken steps to prevent breaches occurring again. Mr Boden in that regard referred to an audit having taken place but Mr Hertzberg was not aware of that.
I was surprised to some extent, however, that no person from Moonlight actually gave evidence. That raised for me some concerns about the undertaking given by Moonlight to repay the sum of $160,000.00 involved. My concerns were not diminished upon learning that Moonlight disputed it should be accountable for the whole of that amount and sought to lay some blame elsewhere.
I was surprised also though that the sum in question had not yet been actually repaid, without demur, and I consider that to be a factor of importance. Moonlight in effect was asking for a favourable outcome but was not prepared to actually repay the Commonwealth the amount involved despite admitted breaches.
I agree there appears to be no order of priority given in the legislation as to whether a cancellation or a suspension applies but that does not mean that it is inappropriate to order cancellation for a first offence, so to speak, if the offence is serious enough and the circumstances warrant it.
I am satisfied in this case that the admitted breaches are sufficiently serious to warrant that course. In that regard, I agree with the matters highlighted by Mr Hertzberg in response to Mr Boden.
The admitted breaches in this matter were frequent and are of a serious nature, potentially impacting on the children under the care of the service. In particular, they are serious in point of amount and in number—perhaps as many as 7000 occasions are involved. I do not accept the submission that based on an overall percentage relative to the total amount of care in question, that this is not a serious or concerning number. Further, as I have said there has been no repayment of the money involved.
Finally, I see no merit in Moonlight blaming the educators involved: Moonlight had a clear obligation imposed on it by Commonwealth law and it is not in point to explain away failure to meet that obligation by referring to the errors of others. This shows up in my view as a failure of governance which is central to the admitted breaches of the Applicant.
In all the circumstances I am satisfied on the evidence before me that the correct or preferable decision is one where the decision under review is affirmed.
The decision under review accordingly is affirmed.

29. I certify that the preceding 28 (twenty-eight) paragraphs are a true copy of the reasons for the written reasons herein of Dr Damien Cremean, Senior Member

[sgd]......................................................
Associate
Dated 7 August 2018

Date of hearing

Solicitors for the Applicant

7 December 2017

Mr Kimani Boden, Starnet Legal Pty Ltd

Solicitors for the Respondent Mr David Hertzberg