Secretary, Department of Education and Training v Simpson Networks Pty Ltd t/as Melbourne School Holiday Club
[2019] FCAFC 239
•23 December 2019
FEDERAL COURT OF AUSTRALIA
Secretary, Department of Education and Training v Simpson Networks Pty Ltd t/as Melbourne School Holiday Club [2019] FCAFC 239
Appeal from: Simpson Networks v Secretary, Department of Education and Training [2019] FCCA 804 File number: QUD 259 of 2019 Judges: GREENWOOD, YATES AND COLVIN JJ Date of judgment: 23 December 2019 Catchwords: ADMINISTRATIVE LAW - appeal from decision of the Federal Circuit Court quashing decision of a delegate of the Secretary relating to the payment of child care benefits - where respondent was a provider of child care services - consideration of the provisions of the A New Tax System (Family Assistance) Act 1999 (Cth) and the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) - where delegate found that there was no genuine liability to pay as required under s 43(1)(c) of the Act - where delegate calculated a zero rate and nil amount in fee reduction - whether delegate was required to consider the actual arrangements made by the provider with the eligible individuals - whether primary judge erred in finding that the delegate failed to undertake the statutory task in failing to consider a mandatory relevant consideration - whether primary judge erred in finding that the delegate's decision was unreasonable - where primary judge erred in undertaking the task entrusted to the delegate on review - appeal allowed Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth) s 16
A New Tax System (Family Assistance) Act 1999 (Cth) ss 9, 10, 41, 42, 43, 71, 72, 73, 81, 82A
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 50F, 50T, 50Z, 50ZA, 51B, 219B, 219BB, 219BC, 219N
Cases cited: Foster v Minister for Customs and Justice [2000] HCA 38; (2000) 200 CLR 442
Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24
Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; (2014) 231 FCR 437
Minister for Immigration and Border Protection v Stretton [2016] FCAFC 11; (2016) 237 FCR 1
Minister for Immigration and Border Protection v SZVFW [2018] HCA 30
Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323
Date of hearing: 18 November 2019 Registry: Queensland Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 110 Counsel for the Appellant: Mr G Kennett SC with Ms J Davidson Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: Mr SJ Keim SC with Mr CGC Curtis Solicitor for the Respondent: Simpson Quinn Lawyers ORDERS
QUD 259 of 2019 BETWEEN: SECRETARY, DEPARTMENT OF EDUCATION AND TRAINING
Appellant
AND: SIMPSON NETWORKS PTY LTD TRADING AS MELBOURNE SCHOOL HOLIDAY CLUB
Respondent
JUDGES:
GREENWOOD, YATES AND COLVIN JJ
DATE OF ORDER:
23 DECEMBER 2019
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The judgment of Judge Egan of the Federal Circuit Court entered on 29 March 2019 be set aside and in lieu thereof it be ordered that the application for review be dismissed and the applicant (respondent) pay the respondent's (appellant's) costs of and incidental to the application to be taxed on a party and party basis under Part 40 of the Federal Court Rules 2011 (Cth).
3.The respondent do pay the costs of the appeal to be assessed if not agreed.
4.There be liberty to apply within 10 days to vary the costs orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
These proceedings concern the payment of child care benefits. Simpson Networks Pty Ltd trading as Melbourne School Holiday Club (MSHC) provided care for at risk and vulnerable children during the school holidays. Funding for the care was expected to come through payments by way of fee reduction made directly to MSHC under Commonwealth legislation relating to child care benefits. The making of the payments was administered by the Secretary, Department of Education and Training (Secretary).
In order for a provider of child care to be eligible to receive payments from the Commonwealth by way of fee reduction it needed to be an approved child care service. MSHC was approved at the relevant time. However, its approval was cancelled with effect from 15 July 2017 (being immediately after the period the subject of these proceedings).
Approved child care services were required to provide weekly reports to the Secretary concerning the care that had been provided by the service. The Secretary then calculated the fee reduction amount for that week and notified the service of the rate applied and the amount calculated for care provided in respect of each child.
On 14 August 2017, after provision of additional information by MSHC in response to requests, a delegate of the Secretary calculated a zero rate and nil amount for all children the subject of the reports submitted by MSHC for the weeks 3 to 7 July and 10 to 14 July 2017. MSHC was notified accordingly. The effect was that expected fee reduction payments for 146 children of $1,490,892 were not paid to MSHC.
MSHC sought a statement of reasons for the decision. Short reasons were provided. They were to the effect that the delegate was not satisfied that the fee amounts reported reflected an underlying and genuine fee liability and for that reason there was no amount payable.
The relevant legislation excludes merits review of the decision. MSHC sought judicial review in the Federal Circuit Court. It sought an order that the decision be set aside for jurisdictional error and also relief under s 16(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act). The application was upheld. Orders were made for the decision to be quashed and the matter remitted to the Secretary for determination according to law. The Secretary now brings an appeal against that decision.
For the following reasons, the appeal should be allowed.
Factual context
The evidence before the primary judge included MSHC's standard complete enrolment package. The package included materials stating that MSHC operated a care programme every school holidays from 8.00 am to 6.00 pm and that it provided care from 6.00 pm to 8.00 am at no charge. Breakfast, lunch and tea were provided each day and were said to be 'included in your fee'.
The enrolment package did not describe the fees to be paid in a prominent way. It stated that newsletters were sent out at the end of each program with up to date information about the program 'and information about fees'. The package described child care benefits that were available to 'eligible grandparents' and '[f]amilies experiencing family hardship'. There was information in the package about how to obtain a child care benefit. It included the following statement:
You can claim Child Care Benefit by completing and lodging a claim form at any Family Assistance Office … Full fee is $988 per day. Note: You need to claim for Child Care Benefit even if you are assessed at the zero rate so that you can also receive your Child Care Rebate.
There was also evidence that the fees were displayed at the place where attendance sheets were kept as this was required by a licence held in Victoria and as a matter of good practice.
The package included an enrolment form which required the individual arranging the child care to sign to a form of acknowledgement to the effect that the person was responsible for the payment of fees at the end of each week and that the person was aware that MSHC would be claiming child care benefits on behalf of the person (being a reference to claims for the payment of benefits by way of fee reduction).
The delegate of the Secretary who made the decision provided an affidavit in the Federal Circuit Court recounting the background leading up to her decision. She described the fact that the approval of MSHC as a child care service under the relevant legislation was cancelled on 6 July 2017 with effect from 15 July 2017.
A consequence of the delegate's decision to cancel MSHC's approval was that it could no longer submit weekly reports according to the computerised system for submitting those reports. A request was made for outstanding reports to be submitted manually. After some exchanges between the department and MSHC, the reports were submitted on 30 July 2017. They were in the form of spreadsheets with supporting information.
The delegate deposed that on 3 August 2017 MSHC requested an internal review of the cancellation decision and submitted a long document in support of that request. The annexures that formed part of that document included all the materials forming part of MSHC's standard information pack. There is no indication in the affidavit that the long document was considered by the delegate for the purposes of making the decision under review which concerned only the weekly reports.
On 11 August 2017, MSHC requested the prompt consideration of the outstanding weekly reports. The delegate deposed that in making the decision under review she had regard to a minute prepared by a departmental compliance officer, the notice of cancellation and the reasons given. The reasons referred to a 'fee breakdown brochure'. The delegate said that she obtained a copy of the brochure and considered it as well as the minute and attachments in making the decision. The brochure as considered was annexed to the delegate's affidavit. It was one of the documents forming part of the information pack. The front page was headed 'Fee Breakdown Where do the fee's go?' (sic). It described the nature of the service and the costs that were covered, but did not describe the amount of the fees or the arrangements for their payment.
The delegate made her decision on 14 August 2017.
Therefore, the material considered by the delegate did not include the complete information pack that was produced by MSHC in evidence before the primary judge.
Factual issues and judicial review
As the application before the primary judge was not an application for merits review, it was not open to MSHC to advance a case to the effect that there had been factual error as to the approach concerning the nature of the fee arrangements made by MSHC with each of the parents, guardians and other individuals with whom it had made arrangements to provide child care. The question was whether there had been reviewable error under the ADJR Act or jurisdictional error.
The principal complaint made by MSHC was that the delegate did not consider a matter that the delegate was required to take into account. Both at common law and under the ADJR Act, there is no error of that kind unless it can be demonstrated that a matter that had to be taken into account in order for there to be a valid exercise of the decision making power had not been considered. In the language of the decided cases, the consideration must be 'mandatory'. As was said by Brennan J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 55:
The Court has no jurisdiction to visit the exercise of a statutory power with invalidity for failure to have regard to a particular matter unless some statute expressly or by implication requires the repository of the power to have regard to that matter or to matters of that kind as a condition of exercising the power.
The legislative provisions
The child care benefits in issue were benefits that might be obtained under the A New Tax System (Family Assistance) Act 1999 (Cth) (Act). The Act provided for child care rebates of various kinds. Matters concerned with the process and procedure for making claims to child care benefits were separately addressed by the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (Administration Act).
The provisions of the Act and the Administration Act are a thicket of obscurity created by interwoven lengthy provisions that appear to seek to deal in a prescriptive manner with every possible eventuality. They lack both the beauty and precision of an algorithm as well as the mediation that might be facilitated by clear conceptual expression adaptable in the hands of good bureaucracy to ensure efficiency and fairness in every eventuality. They would defy ready interpretation by any person that the legislation is intended to benefit. The legislation has since been repealed. Nevertheless, the burden of these proceedings requires the Court to labour through them.
Broadly speaking, the Act concerned eligibility for a rebate and the Administration Act concerned how a person could become entitled to payment of a rebate.
The legislative scheme applied to child care provided by 'an approved child care service'. Relevantly for present purposes, it allowed for eligibility for a child care benefit 'by fee reduction for care provided': s 41(2)(a) of the Act. There were other types of child care benefits for which there may be eligibility but they are not in issue in these proceedings. Fee reduction involved allowing a child care service to seek the payment of the child care benefit to the service directly by way of reduction of the extent of a liability incurred by the individual who had engaged the service to provide child care. In most instances, it was the individual who was entitled to the rebate, but the legislation allowed the child care service to claim payment by way of fee reduction where certain requirements were satisfied. For many types of rebate, ultimate eligibility depended upon the individual qualifying for the family tax benefit based upon their income earned in the financial year in which the rebate was claimed. Therefore, although payment by fee reduction might occur through the year, once the individual’s tax return was lodged there could be an adjustment if required. For the most part, these aspects of the scheme may be ignored for present purposes.
Speaking generally, the Act said that an individual 'is eligible for child care benefit by fee reduction for a session of care', if there has been a determination of conditional eligibility under the Administration Act and the care has been provided: s 43(1). Importantly for present purposes there was no eligibility unless the individual 'incurred a liability to pay for the session of care': s 43(1)(c) (emphasis added). This requirement was consistent with the concept of payment of a 'benefit by fee reduction'. Language of that kind necessarily contemplated the existence of a liability to pay a fee for child care for which liability could be reduced.
Any determination of conditional eligibility was to be made under s 50F of the Administration Act. It was to be made by reference to the categories in s 42 of the Act. They specified the types of persons who were conditionally eligible for child care benefit by fee reduction. They included those responsible for the care of the child who were entitled to receive the family tax benefit: s 42(1).
Under s 71(a) and (c) of the Act, the total amount of the weekly overall child care benefit for sessions of care where there was eligibility for a child care benefit by fee reduction for sessions of care could not exceed 'the amount that the service would have charged' if there was no eligibility for the benefit. There was a limit of the same kind on the rate of fee reductions for each session of care: s 72 of the Act.
Therefore, the legislation contemplated an upper limit on eligibility for a benefit paid by way of fee reduction that was determined by the total amount that would be charged if there was no eligibility for the benefit. This concept must be understood in circumstances where the very nature of the statutory criteria for the entitlement to a child care benefit payable by fee reduction meant that the person seeking the child care service may well have financial difficulty in meeting the full cost of the service. In short, if there was no benefit by fee reduction then there was likely to be difficulty in affording the child care. In that context, the notion of an amount that would be charged if there was no eligibility for the benefit suggests a limit on fees established by reference to market rates that would apply where an individual was not entitled to the child care rebate by fee reduction and was paying all of the cost of the child care out of his or her own pocket. The significance of this aspect of the legislation in the present context is that it did not contemplate that the individual assumed an obligation to pay irrespective of whether there was an entitlement to a benefit and the benefit was by way of fee reduction. Rather, it was directed at ensuring that the overall fees charged by the child care service (including those fees that might be reduced by the benefit) were not inflated by reason that the benefit was available.
The Act had detailed provisions in a schedule as to how rates for child care benefits by fee reduction were to be worked out: s 73(1)(a). However, the schedule did not apply in the present case. Rather, the relevant rates were those described in s 73(1)(c) and (d). They were rates that applied where sessions of care had been provided to children who were at risk of serious abuse or neglect and also to children in the care of eligible grandparents. As a result the shorthand terms 'special rate of child care benefit' (SCCB) and 'grandparent rate of child care benefit' (GCCB) came to be used to refer to the fee reduction rates that applied in those cases (even though those terms are not to be found in the legislation).
The rate in s 73(1)(c) was the rate for the SCCB which required a determination under s 81 of the Act. The rate in s 73(1)(d) was the rate for a GCCB which required a determination under s 50T of the Administration Act.
As to s 81 of the Act, it conferred a power upon the Secretary to determine the hourly rate of fee reductions for sessions of care that a service provided to a particular child for a particular period. The power could be exercised in circumstances such as hardship or where a child was at risk of serious abuse or neglect. It required an application to be made to the Secretary: s 81(4)(a) and (5). The Secretary was then required to make a determination and notify the name of the child and the rate determined in respect of sessions of care provided by the service to that child: s 81(9) and (10). The provision contemplated the possible determination of a fee reduction that could account for the whole of the fee charged by the service.
As to s 50T of the Administration Act, if a determination was made under that provision then then s 82A of the Act provided that the special grandparent rate for the child and the hourly rate of fee reductions for a session of care became 100% of the hourly rate charged by the service for the session.
If the power under s 81 of the Act was exercised or there was a declaration under s 50T of the Administration Act then the service was obliged to ensure that the fees charged for the sessions of care for which there was an approved rate did 'not exceed the amount of the fees that the service would charge for the same session for the same child if that rate did not apply': s 219BB and s 219BC of the Administration Act. Therefore, the SCCB rate and the GCCB rate could not be charged on a differential basis when compared to individuals who were not entitled to sessions of care at the approved rates. This provision appears to be designed to confine a rebate that applied to the whole of the fee to an amount that would otherwise be charged to an individual for the care of a child if there was no rebate.
It is to be noted that all of these provisions operated in respect of a 'session of care'. Section 9 of the Act provided that the Minister may by legislative instrument determine what constitutes a session of care. A determination was made (Determination) and at the relevant time it provided in cl 6 as follows:
(1)Subject to section 11, for the purposes of the Act, a session of care is the minimum period of time in respect of which an approved child care service imposes a liability on an individual by charging a fee for providing child care.
(2)To avoid doubt, a genuine legal liability must arise in respect of the fee referred to in subsection (1) under an arrangement which requires an individual to pay the fee irrespective of any payment made by the Secretary under the family assistance law to discharge some or all of that liability.
(3)A session of care may start on one day and end on the next day, however, a session of care must not exceed 12 hours.
As already noted, the service was required to provide weekly reports in respect of each individual said to be entitled to a benefit and the child for whom care had been provided. The reports were to be provided under s 219N of the Administration Act. Amongst other things, the report had to include any information required by the Secretary that was relevant to determining (a) whether a fee reduction was applicable and if so the rate and amount of that fee reduction (s 219N(4)(a)); and (b) whether an individual was eligible to receive a child care rebate (s 219N(4)(aa)(i)).
If there was determination of conditional eligibility under s 50F of the Administration Act and a report had been given under s 219N of the Administration Act then 'the Secretary must calculate the rate at which, and the amount in which' the Secretary considered fee reduction was applicable in respect of the session or sessions of care provided in the week: s 50Z(1).
The decision of the delegate under review by the primary judge was a decision made in performing the statutory requirement to make the calculation required by s 50Z for the last two weeks for which MSHC was an approved service.
As to the making of the calculation, s 50Z(2) provided:
In calculating the rate and amount, the Secretary must take into account all of the following decisions:
(a)determinations made under this Act and under the Family Assistance Act by the Secretary in respect of the claimant and the child;
(b)certificates given by the service in respect of the claimant and the child that relate to a weekly limit of hours under subsection 54(10), 55(6) or 56(3) of the Family Assistance Act;
(c)certificates given by the service setting a rate of fee reductions under subsection 76(1) of the Family Assistance Act in respect of the claimant and the child.
The reference to determinations in s 50Z(2)(a) would encompass determinations of the rates for the SCCB and GCCB. The calculation to be undertaken was required to take into account those determinations as made by the Secretary. It may be expected that those rates, having been set by the Secretary, would usually be applied unless there was some other issue raised, such as whether the fees had actually been incurred, child care had actually been provided or the rates, despite being approved, were actually charged differentially contrary to s 219BB or s 219BC of the Administration Act.
Then, s 50Z(3) provided that the Secretary must notify the approved child care service of the rate and amount calculated.
It may be observed that the statutory task did not involve the making of a discretionary judgment. Rather, it required the making of a calculation of an amount that the Secretary considered should apply for fee reduction, being an amount that was the outcome of the procedures specified in the Act and Administration Act for establishing the rate, eligibility and entitlement to a rebate by way of fee reduction.
On the appeal, counsel for MSHC accepted that the delegate of the Secretary in making the calculation as required by s 50F of the Administration Act, could form the view that the requirement in s 43(1)(c) of the Act that the individual had incurred a liability to pay for the session of care was a requirement that had not been met and on that basis calculate a nil amount for that child. The main thrust of the submission for MSHC was that the delegate could not form that view without considering the details of the arrangements between the individual and the child care service in respect of each child in respect of whom the calculation was to be made. The consideration of those matters was said to be a mandatory consideration. It was submitted that there had been a failure to undertake that aspect of the statutory task.
There was no separate procedural fairness ground raised concerning the manner in which the delegate approached the task. In particular, there was no complaint that there had been a failure to obtain information about the fee arrangements made by MSHC with individuals as to liability for child care or that there had been a failure to afford MSHC an opportunity to provide information relevant to that aspect (or a failure to exercise the power under s 219N(4) of the Administration Act to require MSHC to provide further information relevant to whether each individual had incurred a liability to pay for the session of care). Further, even though submissions were advanced to the effect that the rate claimed was a rate that had been determined by the Secretary for the SCCB and GCCB that was to apply for individuals placing children in the care of MSHC, it was not said that there was any error by the delegate in not bringing that rate to account.
The compliant made by MSHC was concerned only with the failure to consider the actual arrangements made by MSHC with the individuals in respect of whom rebates by fee reduction were claimed.
Finally, we note that s 50ZA of the Administration Act conferred a power on the Secretary to recalculate the rate at which and the amount in which the Secretary considers a fee reduction is applicable. There appears to have been no request for the exercise of that power based upon additional information. Instead, as we have noted, it was claimed that there was a mandatory requirement to consider the particular factual circumstances bearing upon whether there was a liability to pay, which requirement had not been met by the delegate. It was somewhat difficult to extract from the argument advanced for MSHC the precise nature of that mandatory requirement. It was submitted that in all cases where there was an issue as to whether there was a liability on the part of the individual to pay for each session of care, it was mandatory to consider the detail in order to determine whether there was a legal basis (contractual or otherwise) upon which there was a liability to pay.
The reasons for decision of the Secretary's delegate
The reasons for decision of the delegate comprised eight paragraphs.
Paragraph 1 compared the fee reported by MSHC per hour of $98.90 with average fees for Victoria of $6.42 per hour for all vacation care services, $13.41 per hour for GCCB for vacation care and $11.67 per hour for SCCB for vacation care.
Paragraph 2 is not material for present purposes. Paragraph 3 noted that applications under s 81(5) of the Act had been made for sessions of care provided to 146 children in relation to which the delegate was satisfied that each child was at risk of serious abuse or neglect.
As we have observed, s 81(1) of the Act contemplated that a determination by the Secretary would establish the rate applicable for a child care benefit by fee reduction for sessions of care provided to a child at risk. Section 81 also required the person making the determination to give a notice to the service providing the care that stated: (a) the name of the child; and (b) the rate determined in respect of sessions of care provided by the service to the child: s 81(10). In doing so it established a rate for which there was eligibility if the other requirements that gave rise to an entitlement were met. Unless there was a breach of the Act, the Secretary must have approved the rate to be applied by MSHC as an eligible rate.
Further, if there was an approved rate, the delegate was required to have regard to the approved rate in determining the rate to be applied and the amount of the fee reduction for each child. It was in that context that paragraph 4 of the delegate's reasons commenced by saying:
Any determination about the hourly rate of fee reductions in respect of sessions of care provided to a child in a week does not, of itself, dictate how much is to be paid for reported sessions of care.
Nevertheless, it is striking that the reasons of the delegate make no reference to that rate. It might be inferred that the rate claimed was the rate as determined. However, the actual determination was not before the primary judge or the Court on the appeal. The absence of that information reflects the nature of the case advanced by MSHC.
The paragraph then set out the distinction between the process for establishing the applicable rate and the process for determining whether there was an entitlement to payment of the benefit by way of fee reductions. It noted, correctly, that rates were to be determined by applying s 73 of the Act and that it was a matter for the Secretary under s 50Z of the Administration Act to apply the rate to the sessions of care for which the Secretary considers the individual is actually eligible.
In paragraph 5, the delegate referred to s 43(1) of the Act. The delegate expressed the view that it provided that an individual must have incurred a liability to pay for a session of care in order for there to be eligibility for a child care benefit. This view appears to be correct, at least insofar as it concerns s 43(1)(c). Other provisions were also identified by the delegate to support the general proposition that payment as a fee reduction was only possible where there was a fee liability to actually reduce. Those provisions were s 71 and s 72 of the Act and s 219B of the Administration Act.
Paragraph 6 stated the delegate's view that the fees reported by MSHC 'appeared to be deliberately inflated simply to attract high rates of SCCB and GCCB and I did not consider them to reflect an underlying and genuine fee liability incurred by any individual'. We note that this reasoning sits somewhat uncomfortably with the earlier recognition that the rates claimed had been determined as applicable rates under s 81(5) of the Act. Nevertheless, the delegate then said:
Because I did not consider that the relevant individuals incurred any fee liability in respect of care, I considered that no amount was payable in respect of the reported sessions of care.
In paragraph 7, the delegate gave a further reason as to why no sessions of care were provided. It was based upon the statement in the Determination that to avoid doubt 'a genuine legal liability must arise in respect of the fee … which requires an individual to pay the fee irrespective of any payment made by the Secretary under the family assistance law'.
However, we note that the Determination was made solely for the purposes of s 9 of the Act which was concerned with the definition of a session of care. If the Act and the Administration Act otherwise conferred an entitlement to a benefit by fee reduction, the terms of the Determination as to what was a session of care could not subvert that entitlement. Section 9 did not confer delegated authority to alter the entitlements otherwise conferred by the Act. There are at least four particular contextual reasons why this is so.
First, s 43(1)(c) of the Act provided that in order to be eligible for child care benefit by fee reduction for a session of care the individual must have 'incurred a liability to pay for the session'. The effect of the Determination was to provide that the individual must have incurred a liability to pay for a session of care in respect of which a genuine legal liability must arise (being a liability under an arrangement of a particular kind). Even though the Act provided that what is required is a liability to pay for a session of care, the power to define a session of care was purportedly exercised in a manner that confined the statutory requirement that the individual had 'incurred a liability to pay' even though the terms of s 9 did not expressly confer a power, in effect, to amend the Act.
Second, the provisions of the Act dealing with sessions of care indicated that it was concerned with matters that define a period for which a charge may be raised even though care is only provided for part of the session: see, for example, s 10. In effect, it was concerned with defining the extent to which a service could specify a minimum period for which there would be a charge irrespective of the duration of actual care provided.
Third, the Act had its own provisions directed at whether there was a liability to pay and imposing limits upon the amounts that may be charged. They did not require that an individual incur a liability to pay irrespective of whether there was a child care benefit by way of fee reduction. Rather, they required the total fees not to exceed market rates and proscribed differential charging.
Fourth, as already stated, the nature of the eligibility provisions suggests that many of those who may be eligible would be unable to afford to accept a liability to pay even if no benefit by way of fee reduction was forthcoming. It would be inconsistent with the overall legislative scheme if an individual had to demonstrate that they could pay for the session of care even if there was no rebate.
In that context cl 6(2) of the Determination should be construed as no more than a reminder that s 43(1)(c) of the Act requires that an individual must have incurred a liability to pay for the session of care before there could be an entitlement on the part of the individual to a child care benefit by fee reduction.
The delegate went on in paragraph 7 to state:
My view was that, based on the information available to me, no individual had actually incurred a liability to pay a fee of $98.90 per hour, especially given that hourly fees at that rate could add up to extraordinarily large fee liability across a week for which I considered that no one would agree to pay.
Although those reasons were included in paragraph 7, we take them to be a further explication of the reasons at both paragraphs 6 and 7. Therefore, as to whether an individual had incurred a liability to pay for the session, the above passage disclosed the basis for the conclusion reached by the delegate.
Paragraph 8 simply restated the result which was that a nil payment was applicable.
It can be seen that, putting to one side the references to the Determination, the decision by the delegate rested on the view that the individuals placing children with MSHC did not incur a fee liability to MSHC as required by s 43(1)(c) of the Act and therefore there was no entitlement to a benefit by fee reduction. The decision depended upon the finding that there was no genuine liability to pay in respect of the care. The conclusion that there was no liability to pay was based upon two factual findings: (a) based on the information about average fees charged for holiday care, the fees were inflated in an artificial way; and (b) the fees could add up to an extraordinarily large liability across a week for which no one would agree to pay.
We emphasise at this point that the case for MSHC did not draw upon any complaint about the manner in which the delegate approached the determined rate. It was not said, for example, that the determined rate was a matter that the delegate was required to bring to account and therefore was a matter that should have been considered in making the factual findings as to whether the rate claimed by way of rebate by fee reduction were inflated or might have been agreed by any individual. Rather, as we have already noted, the case was that the error by the delegate was in failing to consider material concerning the actual arrangements made by MSHC with each of the individuals concerned. The argument was developed by reference to the material, particularly the matters in the enrolment pack, which was before the primary judge but not the delegate. However, the issue was not whether there was material which if considered by the delegate might have caused the delegate to reach a different view. The issue was whether the actual terms of the arrangement were a mandatory consideration.
Grounds of review advanced in the Federal Circuit Court
The form of application in the Federal Circuit Court did not properly differentiate between the grounds advanced and the description of the details of the claim being made. There were general claims of errors in the part of the application where details of the claim should have been expressed. There were contentions in the manner of short form argument which identified alleged errors. Nevertheless, the grounds raised by the overall terms of application can be distilled as follows:
(1)The delegate erred in law in construing the expression 'genuine legal liability' in the Determination as involving a consideration as to whether the individual could afford the fee charged for the care when the expression should have been construed as requiring a consideration as to whether there was a genuine arrangement or agreement in place to provide care which required consideration as to whether the agreed care was provided;
(2)By considering only the quantum of fees, the delegate erred by failing to consider whether a liability arose in all the circumstances;
(3)The delegate failed to take into account a mandatory relevant consideration, namely the particular arrangements that had been entered into between MSHC and the individuals;
(4)The decision was wrong and unjust because:
(a)the fees charged were genuine and appropriate taking into account the nature and type of care provided;
(b)the fees were no more than the usual fee charged by MSHC for the services provided; and
(c)the sessions of care were in fact provided.
We note that the matters stated in (4) above were not couched in terms of a recognised ground of review.
Further, as we have noted, it was not claimed that the fees charged were appropriate because they conformed to a determination made under s 81 of the Act.
It can be seen that the grounds accepted that MSHC had to demonstrate that there was a legal liability to pay for the sessions of care on the part of the individuals. The issues joined were:
(1)whether the delegate acted upon a proper view of the law by focussing on whether the person could afford to pay for the service; and
(2)whether there was a failure to take into account a relevant consideration being the particular arrangements made with the individuals by MSHC.
The reasoning of the primary judge
After dealing with the legislative provisions, the primary judge observed that it was clear from the delegate's reasons that she considered that an amount of $988 for daily care of each child was so excessive that no genuine fee liability could have been incurred: at [40].
The primary judge then noted that there was no issue that the sessions of care had been provided: at [40]. We take this to record a concession that care had been provided to the children for the periods as claimed rather than a concession that 'sessions of care' as defined by the Determination had been provided. Before the primary judge there was an issue as to whether this was the case by reason of the view taken by the delegate that there were no sessions of care unless there was a genuine liability to pay for those sessions irrespective of any payment made under the legislation. The primary judge proceeded on that basis because the primary judge considered whether there was a liability to pay (see below).
The primary judge found that the words in the Determination imported no greater requirement than that to be found in s 43(1)(c) of the Act, namely that there could be no entitlement to a child care benefit payable by fee reduction unless there was a liability to pay for the session of care: at [41]‑[42]. In this respect, for reasons we have given, the primary judge was correct.
As to the terms of s 43, the primary judge noted that they did not stipulate the means by which 'a liability to pay for the session' might arise and the provision did not require the liability to be based upon a written contract: at [43]. Reference was made to the evidence adduced for MSHC. It was noted that it was not challenged as to the amount of the full daily fee, but was silent as to what fees were payable is respect of children who fell under either the SCCB or GCCB categories that applied to all the children in the present case: at [44].
The primary judge then found that the enrolment form on which the delegate based her decision failed to set out either the daily fee or a session fee for SCCB or GCCB care and the document was deficient in that respect: at [45]. His Honour found that in those circumstances there was no contractual right to payment but there was still a right to payment on the basis of a quantum meruit which was a legal liability to pay for the purposes of s 43 of the Act: at [50].
These aspects of the reasoning embark upon a determination as to whether there was a liability to pay. With respect, that was not the nature of the task for the primary judge. It was not for the primary judge on an application for review to undertake the task of determining whether, in the view of the Court, there was a liability to pay. The question was whether there had been reviewable error by the delegate in making that determination either because a wrong view of the law had been applied or there was a failure to have regard to a consideration that had to be addressed in order for there to be a valid exercise of the statutory power under s 50Z of the Administration Act (being the nature of the review grounds raised by MSHC).
The primary judge then used his own factual conclusions to the effect that there was a liability to pay on a quantum meruit basis as the basis for concluding that there was a failure to take account of all relevant considerations: at [51]. To reason in that way was to conclude by reference to evidence that a different conclusion should have been reached on the issue of liability to pay. Again, this was not to undertake a consideration of the grounds of review but to embark upon the task entrusted to the delegate.
In expressing the conclusion that there had been a failure to take account of relevant considerations, the primary judge did not refer to the terms of s 50Z of the Administration Act or identify the nature of any mandatory consideration by reference to the Act, as distinct from the factual matters to be determined in the particular case.
The primary judge then found that the Secretary had a mandatory obligation to calculate the rate at which fee reduction was applicable by reference to the going rate for fees charged by other child care providers in like circumstances being information that was before the Secretary: at [51]. The basis upon which this conclusion was reached is not explained. It appears that the primary judge assumed that the average charges to which the delegate referred in her decision indicated access to a database of information that might have been used to inform a quantum meruit assessment that could have been used to calculate a rate and amount to be paid. However, the legislation did not provide for the calculation of a rate by reference to the amount that might be payable on the basis of the nature of the liability to pay. Rather, it provided for the amount of the benefit by way of fee reduction to be calculated by reference to the determinations that had been made by the Secretary.
Therefore, the primary judge's error in purporting to make findings as to the nature of the liability to pay (quantum meruit) was compounded by a view that there was unspecified evidence available to the delegate from which a calculation might be made in a manner that would be contrary to the requirements of s 50Z. Whether there might have been other evidence was not the question. The issue was whether there was reviewable error, not whether the delegate should have considered other material and made a different decision on the facts.
The primary judge then found that it was 'unreasonable, and unfair' for the delegate to calculate a nil amount and zero rate in those circumstances, namely the circumstances we have already described: at [53]. It was said to be unreasonable because it resulted in MSHC receiving no benefit for its provision of child care services, an error said to be jurisdictional because it lacked an evident and intelligible justification, citing the decision in Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 at [66], [76].
The outcome that no benefit was paid could not, of itself, be unreasonable. As counsel for MSHC accepted, the delegate properly embarked upon a consideration as to whether there was a liability to pay. If there was no liability to pay then there could be no benefit. A claim to a fee reduction could not be made if no individual had made an arrangement for MSHC to care for the child. The unreasonableness finding seems to be no more than a conclusion that a different decision should have been made on the facts.
Therefore, the decision of the primary judge rested upon two findings as to error by the delegate. First, a failure to consider the calculation of the relevant amount on a quantum meruit basis, said to be a failure to consider a mandatory consideration. Second, unreasonableness by calculating a nil amount in circumstances where the consequence would be that there would be no payment for the provision of child care services. The claim that there was an erroneous view of the law that was applied by the delegate was not specifically addressed. It was not a matter that was the focus of any submissions by MSHC. Although there was a notice of contention, there was no contention seeking to support the decision of the primary judge on that basis. That aspect of the review application advanced before the primary judge can be put to one side for the purposes of the appeal.
The appeal grounds
The Secretary raises five grounds of appeal. They are to the effect that the primary judge erred in the following respects:
(1)Holding that a quantum meruit basis for a claim was a matter the delegate was bound to consider when exercising the power under s 50Z of the Act;
(2)Holding that the decision was unfair and unreasonable;
(3)Denying the Secretary procedural fairness by failing to afford an opportunity to comment on the quantum meruit point;
(4)Failing to give adequate reasons; and
(5)Holding that it was not in issue that 'session of care' had been provided.
Ground 1: Quantum meruit
It is a question of statutory construction as to whether a particular consideration is one to which there must be regard in order for there to be a valid exercise of a particular statutory power. The identification of the considerations that have that character is a task to be undertaken 'primarily, perhaps even entirely, by reference to the Act [conferring the decision making power] rather than the particular facts of the case that the [decision‑maker] is called on to consider': Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at [73]. Importantly, the level of particularity with which a matter is identified may be significant: Foster v Minister for Customs and Justice [2000] HCA 38; (2000) 200 CLR 442 at [23] (Gleeson CJ and McHugh J).
It is common ground that the delegate was required to have regard to whether there was a liability to pay on the part of the individual dealing with MSHC. The Secretary contends that there was a further obligation to consider whether the individual had that liability irrespective of any payment by the Secretary to discharge some or all of that liability (based upon the terms of the Determination). For reasons we have given, that further step was not a matter that had to be demonstrated in order for a benefit by fee reduction to be claimed by a child care service.
The argument for MSHC is that the delegate had to consider the terms of the actual arrangement made between the individual and the service and if there was no enforceable contractual arrangement then to consider where there was a quantum meruit or other basis for the arrangement. In most cases, it was said, there would be no issue about whether there was a liability to pay and those matters would not need to be specifically addressed. However, where there was an issue, the mandatory consideration was the actual arrangement.
These submissions seek to engage with an evident problem in the level of particularity contended for by MSHC as to what was mandatory for the delegate to consider in order to validly undertake the calculation required by s 50Z of the Administration Act. If it was mandatory to consider the actual terms of the arrangement and all the facts bearing upon whether there was a quantum meruit claim in every case then there could be no valid exercise of power unless that was done.
Given the nature of the task to be undertaken under s 50Z (a weekly calculation of the rate and amount of fee reduction for each child based upon a report and determinations made as to applicable rates) it is unlikely that in each case it was necessary to consider the details of the arrangement made with each individual. Therefore, MSHC contended, in effect, that the details of the arrangement between the approved child care service and the individual were mandatory only if relevant. It may be accepted that, in a particular case, regard to the mandatory consideration whether there was a liability to pay may lead to the delegate considering the terms of the particular arrangement. In doing so, the matter may be approached in a manner that meant there was reviewable error. For example, if a conclusion was reached that there was no liability to pay based upon no evidence at all then the decision would be reviewable. However, the reviewable error was couched solely in terms of a failure to take into account a mandatory consideration, being the terms of the arrangement with each individual. If that were required, then a valid exercise of the power under s 50Z required that consideration to be undertaken in all cases.
The further difficulty with the case advanced by MSHC is that it was not articulated as a matter of construction of the legislation how the terms of the actual arrangement were a mandatory consideration (as distinct from factual matters to be considered where relevant in determining whether there was a liability to pay).
The statutory task being undertaken was the calculation required to be undertaken by the terms of s 50Z of the Administration Act. It required that there be a report under s 219N of the Administration Act before the calculation was undertaken. It might be argued in that context that consideration of the report was mandatory. However, there is no claim of a failure to consider the report. Otherwise, it is not evident how one can extract from the language of the Administration Act (in the context of the legislation as a whole) a mandatory consideration that is more particular than an obligation to consider whether there is a liability to pay as required by s 43(1)(c) of the Act.
The question whether a particular matter must be brought to account is to be considered separately from the facts at hand. It must be discernible from the statute. As we have noted, given the nature of the task under s 50Z, it could not be said that it was mandatory for the Secretary to consider the application of quantum meruit as a basis for the calculation to be undertaken in all cases. With respect, the finding by the primary judge confused a view as to what might be relevant in the circumstances of the particular case (including evidence that was not before the delegate) in considering whether there was a liability to pay, with a view as to what might be required in all cases. It may be that in considering whether there was a liability to pay for a session, part of the inquiry in a case where the Secretary was not satisfied that there was a contractual liability might be whether there was some other legal basis for the liability. However, in such a case the failure to do so must be impugned on some basis other than a failure to take account of a mandatory relevant consideration.
Finally, even if the mandatory consideration was of a kind that required consideration of the particular arrangement, that was done by the delegate. The delegate formed the view that the level of fees charged, in the context of available information as to the average fees charged provided by other services, led to the conclusion that there was no liability to pay. The delegate dealt with the question based upon the information available in the form of the report and the fee breakdown brochure. Further inquiry may have revealed more information. However, as we have noted, the complaint made was not one of procedural unfairness.
For reasons we have given, the primary judge was in error in reaching his own conclusion as to whether there was a liability to pay and finding that liability arose in the form of a quantum meruit. To the extent that it was implicit in that approach that the failure to consider whether there was a quantum meruit basis for the claim was a failure to consider a matter to which there had to be regard in order for the delegate to have made a valid calculation under s 50Z of the Administration Act, the primary judge was in error. The mandatory consideration was whether there was a liability to pay the level of fees in respect of which the benefit by way of fee reduction was sought. The delegate considered that matter. The factual evaluations undertaken for the purpose of considering whether there was a liability to pay were within jurisdiction findings.
Therefore, ground 1 has been made out.
Ground 2: Unreasonableness
The finding by the primary judge of unreasonableness appears to have been based upon the view that there was no consideration of a quantum meruit basis as to what was reasonable and the result of the decision was that MSHC received no payment even though it had provided child care services. It was a finding of jurisdictional error on the basis of unreasonableness.
The submissions for MSHC sought to support the approach of the primary judge as to unreasonableness. They did not rise to articulating some alternative basis for the unreasonableness finding by the primary judge. The matters raised in what was described as a notice of contention dealt only with claims of factual error by the primary judge as a further basis to support the claim based upon a failure to take into account a mandatory consideration (see below).
For the reasons we have given, the fact that the delegate's decision led to the result that there was no entitlement to a benefit by fee reduction did not mean the decision was unreasonable. If indeed there was no liability to pay, that was the proper outcome.
The delegate stated the reasons for her decision. The decision is not demonstrated to be unreasonable by pointing to factual material that was not before the delegate and saying that the decision was unreasonable when that material is considered. The reasonableness of the decision must be evaluated based on the limited factual information before the delegate. As we have said, no argument was advanced by reference to the determinations that had been made as to the SCCB and GCCB for MSHC. The terms of those determinations are not known, even though they are referred to by the delegate.
Therefore, the reasonableness of the decision falls to be evaluated on the basis of the information as to average charges by other services (which are dramatically lower than the benefit by fee reduction sought by MSHC) and the fee breakdown brochure which contained no information about the level of fees at all.
As Allsop CJ said (Wigney J agreeing) in Minister for Immigration and Border Protection v Stretton [2016] FCAFC 11; (2016) 237 FCR 1 at [12]:
Crucial to remember, however, is that the task for the Court is not to assess what it thinks is reasonable and thereby conclude (as if in an appeal concerning breach of duty of care) that any other view displays error; rather, the task is to evaluate the quality of the decision, by reference to the statutory source of the power and thus, from its scope, purpose and objects to assess whether it is lawful. The undertaking of that task may see the decision characterised as legally unreasonable whether because of specific identifiable jurisdictional error, or the conclusion or outcome reached, or the reasoning process utilised.
The statutory task was to calculate the level of benefit by fee reduction in accordance with the legislative provisions, not to determine a fair and reasonable amount. Those provisions required there to be a liability on the part of the individual to pay the fee. If there was no liability there was no entitlement. The calculation was not being made on a final basis. There was power to recalculate the amount (provided there had not been a determination of the yearly entitlement under s 51B): s 50ZA of the Administration Act.
The test for unreasonableness is stringent and extremely confined: Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 at [11], [52], [135]. Where reasons have been provided, they are the focal point for assessing whether the decision was unreasonable: Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; (2014) 231 FCR 437 at [46]‑[47]. Mere strong disagreement with factual reasoning does not establish jurisdictional error: Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [40].
There was material on which the delegate's decision was based. It could not be said to be devoid of logic. It was not a discretionary decision. It involved the making of factual findings for the purpose of determining whether a requirement of the legislation had been met. For reasons we have given, the primary judge's reasoning did not support the finding of unreasonableness.
Therefore, ground 2 has been made out.
Grounds 3 and 4: Procedural fairness and insufficient reasons
As grounds 1 and 2 have succeeded it is not necessary to consider whether there was any procedural unfairness in the primary judge's finding or whether the reasons were insufficient. The points of substance have now been addressed.
Ground 5: Scope of concession on 'session of care'
We have already expressed our reasons for the view that the primary judge correctly stated the position in relation to what was common ground, namely that care had been provided but it was not provided as part of a session of care because no liability to pay had been incurred. In any event, for reasons we have given, to focus upon the definition of session of care is something of a red herring. There was indisputably a requirement that the individual incur a liability to pay in order to be eligible for a benefit by fee reduction. The primary judge proceeded on that basis. The appeal ground raises a false issue.
Notice of contention
MSHC filed a notice of contention that raised four grounds. The first two grounds were misconceived. They alleged error by the primary judge in making certain findings based upon evidence advanced by MSHC before the primary judge. For reasons already given, it was not competent to approach this appeal on the basis that the proceedings before the primary judge were a trial on the facts. They were not. The primary judge was exercising a supervisory administrative law jurisdiction, not a jurisdiction which allowed the primary judge to reach a different conclusion on the facts to that formed by the delegate acting within the statutory decision‑making power conferred s 50Z of the Administration Act.
The third ground alleges that the primary judge was not required to make findings as to whether the agreements made between individuals arranging the care of children and MSHC were enforceable. With this we agree. However, it is not apparent how this means that there is some alternative basis upon which to support the decision made by the primary judge.
The fourth ground is to the effect that the primary judge was correct in finding there were relevant matters that should have been considered. This is not a contention point. It simply states the obverse to ground 1. For the reasons given as to ground 1 of the appeal, ground 4 of the notice of contention should not be upheld.
Conclusion
For the above reasons the appeal should be allowed. The appeal having succeeded and no matters being advanced as to why costs should not follow the event, there should be orders that MSHC pay the costs of the appeal and the costs of the proceedings before the primary judge. Nevertheless, as the question of costs was not separately addressed in submissions, in case there were matters that a party wished to advance in support of different costs orders, we will reserve liberty to apply within a limited time to vary the costs orders.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Greenwood, Yates and Colvin. Associate:
Dated: 23 December 2019
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