Site Skills Group Pty Ltd and Australian Skills Quality Authority
[2020] AATA 4805
•30 November 2020
Site Skills Group Pty Ltd and Australian Skills Quality Authority [2020] AATA 4805 (30 November 2020)
Division:GENERAL DIVISION
File Number: 2018/2310, 2018/2311
Re:Site Skills Group Pty Ltd
APPLICANT
AndAustralian Skills Quality Authority
RESPONDENT
AndVernon Wills
OTHER PARTY
DECISION
Tribunal:Deputy President R I Hanger AM QC
Date:30 November 2020
Place:Brisbane
The Tribunal affirms the decisions under review.
..................................[SGD]......................................
Deputy President R I Hanger AM QC
CATCHWORDS
VOCATIONAL EDUCATION AND TRAINING - registered training organisation – decision under review to reject applicant’s application to renew its registration as an NVR registered training organisation – decision under review to reject the applicant’s application to change its scope of registration under the NVR Act – whether Applicant compliant with Standards for Registered Training Organisations (RTOs) 2015 – where continued non-compliance – fit and proper person - decisions under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
National Vocational Education and Training Regulator Act 2011 (Cth)
Standards for Registered Training Organisations (RTOs) 2015
CASES
Australian Securities and Investments Commission v King [2020] HCA 4
Brighton Pacific Pty Ltd and Australian Skills Quality Authority [2019] AATA 3645
Commissioner for Corporate Affairs v Bracht [1989] VR 821Site Skills Group Pty Ltd and Australian Skills Quality Authority [2019] AAT 1870
REASONS FOR DECISION
Deputy President R I Hanger AM QC
30 November 2020
HISTORY
On 18 April 2018 the Respondent made two decisions under the provisions of the National Vocational Education and Training Regulator Act 2011 (Cth) (the Act).
The first decision[1] was made under section 17 of the Act to reject the applicant’s (SSG) application to renew its registration as an NVR registered training organisation (RTO).[2]
[1] Exhibit 4, T Documents, T1, pages 9 – 12.
[2] “NVR Registered Training Organisation” means a training organisation that is registered by the National VET Regulator as a registered training organisation under the Act; see the Act, s3, Definitions.
The second decision[3] was made under section 33 of the Act to reject the applicant’s application to change its scope of registration.
[3] Exhibit 4, T Documents, T2, pages 49 – 50.
Both decisions are under review.
The review has a lengthy history. It was heard in two tranches. The first tranche involved seven days between 15 and 24 May 2019 (the First Hearing). That hearing concerned what was described as “education issues” as well as the Australian Skills Quality Authority’s (ASQA) application for revocation of an unconditional stay order that had been made on 21 May 2018 (the Stay Order).
The First Hearing did not involve a consideration of what may conveniently be described as “fit and proper person” issues arising from the application of criteria set out in Schedule 3 of the Standards for Registered Training Organisations (RTOs) 2015 (the Standards) mandated by the Act, because the Other Party, Mr Wills, was involved in proceedings in the Federal Court which arguably overlapped with these proceedings. It was therefore agreed between the parties that in the interests of efficiency, the proceedings in May 2019 would not consider the “fit and proper person” issues and would confine itself to issues relating to the quality of education being delivered by the applicant and to the issue of the revocation of the Stay Order made one year earlier.
I gave my interim decision following the First Hearing on 12 July 2019 (the July Decision)[4] and in response to an application brought by the respondent to revoke the Stay Order that was in place. I declined to revoke the Stay Order or impose conditions on it. Put simply, I had a level of confidence that the applicant had implemented or was in a position to implement reforms to ensure better compliance with the Standards.
[4] Site Skills Group Pty Ltd and Australian Skills Quality Authority [2019] AATA 1870.
The Other Party, Mr Wills, was joined on his application to the proceeding by an order of the tribunal made on 30 January 2020 under section 30(1A) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act).
The present proceedings resumed for four days between 7 July 2020 and 10 July 2020 (the Resumed Hearing) after the conclusion of the abovementioned hearing in the Federal Court. The Resumed Hearing involved a consideration of the “fit and proper person” issue as well as a consideration of the “education issues” arising after the First Hearing.
Observations on the system of registration of RTOs
In its closing submission the respondent describes the importance of the system in which it operates. I set out and adopt that submission:[5]
“The authorised conduct for which RTOs are accredited, and for which SSG seeks registration in these proceedings, is to conduct training and assessment leading to issuance of national qualifications that certify vocational skills and competencies that Australian industry can rely on. The only situation in which it is lawful for an RTO to issue such a qualification is after a rigorous assessment process that complies with clause 1.8 of the Standards, which itself requires sufficient, valid, authentic and current evidence of a student’s competence. The maintenance of a robust and reliable system of skill certification is imperative to the economic security of Australia and success of the industry - this is why accredited training and assessment is regulated by ASQA. The fundamental importance of compliant assessment practices is reflected in the legislative prescription of criminal penalties for the provision of nationally accredited training by anyone other than RTOs and, in turn, those reckless RTOs that decide to provide inadequate assessment: see sections 103, 105, 107, 116 and 118 of the NVR Act.”
[5] Respondent’s Closing Submission dated 10 July 2020, page 15, paragraph 51.
A key aim of the Act and the Standards is to provide national consistency in the Australian Vocational Employment Training (VET) sector and to ensure that training is meeting industry requirements. This ensures that industry can have confidence in the training provided and the qualifications awarded to students when they enter the workforce.
The respondent submits,[6] and I accept, that it is relevant for the tribunal to consider, in line with the purpose and content of the Standards:
(a)the protection of students undertaking, or proposing to undertake Australian VET by ensuring the provision of quality VET;
(b)whether training products delivered by the applicant meet the requirements of training packages of VET accredited courses, and have integrity for employment and further study; and
(c)whether the applicant operates ethically with due consideration of learners’ and enterprises’ needs.
[6] Respondent’s Closing Submission dated 10 July 2020, page 15, paragraph 52.
My decision following the First Hearing was delivered on 12 July 2019 and the Stay Order was made by consent on 21 May 2018. It cannot be said that the applicant has not had plenty of opportunity to rectify its deficiencies. In arriving at a final decision in this matter it is important to consider the material available at the hearing more than a year ago as well as subsequent material.
I quote from my earlier decision:
“73.In the present case, the Applicant was given two months’ notice by Mr Sheppard of the intention to conduct an audit. If it was aware of the deficiencies it had time to rectify them. However, there is no evidence that any action was taken other than to comply with requests made by the Respondent. When Mr Sheppard had completed his audit and found that there was critical non-compliance he gave the Applicant one month to respond to his findings. When a massive quantity of material was provided to Mr Sheppard on 20 June 2017 he continued to find critical non-compliance with the standards. I do not place a lot of weight on the findings by Mr Sheppard for the reason that he was overseas at the time of the hearing and was therefore not subject to cross-examination. However, the fact that Mr Sheppard refers to systemic non-compliance should have put the Applicant on notice that it was confronting significant problems. Mr Wallace obviously was concerned because he appointed extra staff as I have outlined above. What they were doing we do not know as none of them were called to give evidence of attempts made or action taken to rectify the issues raised.
74. Despite the concerns that were obviously engendered by Mr Sheppard’s audit and the appointment of the extra staff, when on 27 September 2018 Ms Walker provided her report having reviewed the files of 97 students in 17 training products, she found that the extent of non-compliance demonstrated significant risk to students and current or prospective employers.
75. Ms Duncan in her first audit report of 17 July 2018 audited 17 of 39 clauses and found that SSG was non-compliant with 14 out of those 17. She agreed that was a damning indictment of an RTO that has been operating for seven years.
…
82. The Applicant has available to it a number of resources it can draw upon in order to put systems and processes in place to demonstrate compliance with the Standards. As a starting point it has numerous audit reports which clearly identify how the RTO is non-compliant with the specific clauses. While it is acknowledged the Applicant has taken steps to rectify these issues, and that some of the identified issues of non-compliance are relatively minor, one would expect that if the Applicant were to be audited again in the near future, its level of compliance would be of a much higher standard.” [7]
[7] The July Decision.
It need hardly be said that to terminate the registration of an RTO or to decline to reregister it is a very serious step, with grave consequences and should be a process of last resort. It is not done by way of punishment. It is done to ensure the continued integrity of the system as outlined above.
One of the matters that the tribunal should take into account is the length of time for which an RTO has been registered. This organisation has been registered for eight years, and furthermore these proceedings have dragged on for a long time. It has had plenty of time to rectify identified defects. An audit is a snapshot at a point in time of only a fraction of the operations carried on by the RTO and therefore one can assume that failings identified in the areas audited are roughly consistent throughout the whole organisation. In this matter the RTO has had the benefit of the input of not just the auditors of the respondent, but also of experts retained by itself.
My obligation is to determine the matter as at the date of the hearing and therefore it is important to consider, not just the failings identified in earlier audit reports, but also to consider evidence about what has been done to rectify identified failings, as well as failings that continue to exist.
CONSIDERATION OF THE “EDUCATION ISSUES”
The Standards were made pursuant to the provisions of the Act and the purpose of the Standards is to ensure the integrity of qualifications which are nationally recognised under the Act.
The respondent submits that the applicant was and remains in critical non-compliance with at least the following clauses of the Standards:[8]
·Clause 1.1 Training and assessment Strategies
·Clause 1.2 Duration of training
·Clause 1.5 Industry relevance
·Clause 1.7 and clause 5.1 Student support and advice
·Clause 1.8 Assessment
·Clause 2.4 Third-party monitoring
·Clause 7.1 Executive officers
[8] Respondent’s Closing Submissions dated 10 July 2020, pages 6-7, paragraph 17.
The respondent draws attention to the fact that at the First Hearing the applicant’s own expert raised issues as to compliance with clauses 2.1 and 3.1.[9]
[9] Respondent’s Closing Submissions dated 10 July 2020, page 7, paragraph 18.
The respondent also submits[10] that the tribunal ought to be satisfied that the applicant has failed to comply with sections 25, 26 and 27 of the Act. These are sections that essentially govern the dealings between the applicant, as an RTO, and the respondent. I am not persuaded that the applicant has failed to comply with those sections.
[10] Respondent’s Closing Submissions dated 10 July 2020, page 7, paragraph 18.
In addition the respondent submits[11] that if systematic compliance monitoring and evaluation was in place as required by the Standards, it could be expected that any concerns that were detected by ASQA and then by the tribunal itself in mid-2019 would be minor, recent and capable of ready rectification. There would not be fundamental issues that demonstrate ongoing systemic failures as at July 2020.
[11] Respondent’s Closing Submissions dated 10 July 2020, page 9, paragraph 23.
Evidence filed since the First Hearing
Since the First Hearing in May 2019, the applicant has filed the following additional evidence:
·a statement of Ms Narelle Duncan dated 21 February 2020 containing her report dated 23 January 2020 (the Duncan January 2020 Report);[12]
·an affidavit of Mr Michael Wallace dated 21 February 2020 (the Seventh Wallace Affidavit);[13]
·an affidavit of Mr Michael Wallace dated 5 May 2020 (the Eighth Wallace Affidavit);[14]
·a statement of Ms Narelle Duncan dated 5 May 2020 containing her report dated 5 May 2020 (the First Duncan May 2020 Report);[15]
·a statement of Ms Narelle Duncan dated 18 May 2020 containing her report dated 18 May 2020 and the rectification documents referred to therein (the Second Duncan May 2020 report);[16] and
·an affidavit of Mr Michael Wallace dated 30 June 2020 (the Wallace Ninth Affidavit).[17]
[12] Exhibit 22, Applicant’s Tribunal Bench Book, C03.
[13] Exhibit 22, Applicant’s Tribunal Bench Book, B07.
[14] Exhibit 22, Applicant’s Tribunal Bench Book, B08.
[15] Exhibit 22, Applicant’s Tribunal Bench Book, C04.
[16] Exhibit 22, Applicant’s Tribunal Bench Book, C05.
[17] Exhibit 22, Applicant’s Tribunal Bench Book, B09.
Since the First Hearing the respondent relies on[18] the following additional evidence:
·a report of Ms Cilla Barrand dated 15 April 2020 (the Barrand Report);[19]
·the statement of Jessica MacDonald, dated 2 July 2020;[20]
·all T and ST documents referred to within ASQA’s amended Statement of Issues Facts and Contentions: Standard 7.1 dated 26 May 2020;[21] and
·all documents identified in the education evidence chronology at Annexure A to the Respondent’s Closing Submissions.
[18] As indicated in the Respondents Closing Submissions dated 10 July 2020, page 12, paragraph 35.
[19] Exhibit 23, Report of Cilla Barrand dated 14 April 2020.
[20] Exhibit 27, Statement of Jessica MacDonald dated 7 July 2020.
[21] Exhibit 22, Applicant’s Tribunal Bench Book, A08.
Since the First Hearing the Other Party filed:
·an affidavit by William Wall;
·an affidavit of James Elder;
·an affidavit of Mohammed Akbery.
I have dealt with reports filed in the earlier proceedings and refer to my July Decision. I note that in referring to a report of Ms Duncan dated 30 January 2019 I said that her final report relied on Mr Wallace, CEO of the applicant, implementing a number of matters that he said would be implemented.[22] Ms Duncan was not able to comment at that time on whether those implementations had been made.
[22] The July Decision, [69].
In that decision I said[23]:
“…it does not appear to me that the non-compliance is in any way dishonest as distinct from arising from ignorance or incompetence. Attempts have been made to rectify matters when they have been identified but there are two matters which are at present unclear. The first is whether or not the recommendations of Ms Duncan have actually been put into practice and implemented. The second is whether, given the extent of non-compliance, an effort has been made across the board rather than in respect of the specific matters raised on audit, to address compliance issues.”
Those matters are important.
[23]The July Decision, [77].
The Duncan January 2020 Report
In September 2019, the applicant requested Ms Duncan conduct an on-site audit to assess whether the applicant had satisfactorily implemented matters on which Ms Duncan had advised and whether the applicant was compliant with the relevant Standards.[24] Ms Duncan carried out that audit between 1 and 23 October 2019 and provided the Duncan January 2020 Report,[25] to the solicitors for the applicant on 21 February 2020.
[24] Exhibit 22, Applicant’s Bench Book, C03, Brief to Ms Duncan dated 13 September 2019.
[25] Exhibit 22, Applicant’s Bench Book, C03, Statement of Ms Duncan dated 21 February 2020 and the Duncan January 2020 Report.
In the Duncan January 2020 Report, Ms Duncan reported on 10 different courses and their compliance with clauses 1.1, 1.2, 1.5, 1.7, 1.8 of the Standards, considering a total of twenty-six instances of compliance or non-compliance with those clauses. She expressed the opinion that in twenty of those twenty-six instances the applicant’s rectification action demonstrated compliance with the Standards. She was satisfied that the evidence provided to her now demonstrated compliance with most clauses but she expressed some concern about several of them.
Certificate III in Horticulture Production
Ms Duncan had previously expressed concern about compliance with clause 1.7 of the Standards and continued to find that there was non-compliance. Clause 1.7 relates to the basic skills of language literacy and numeracy and provides:
“The RTO determines the support needs of individual learners and provides access to the educational and support services necessary for the individual learner to meet the requirements of the training product as specified in training packages or VET accredited courses.”
Ms Duncan noted that several answers to questions asked of potential students to determine their language, literacy and numeracy skills, were either incorrect and had been marked correct, or questions that had not been answered were marked correct.[26] Another student had a hearing impairment but there was no information to indicate that he received any support. His Language, Literacy and Numeracy Assessment (the LLN Assessment) indicated that he had at first incorrectly responded to several questions but that then the answers were corrected. There was no indication from the individual administering the assessment as to how he came to correct them.[27] This is obviously relevant in an LLN Assessment.
[26] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 6, paragraph 24.
[27] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 6, paragraph 25.
Diploma of Work Health and Safety
Ms Duncan had previously expressed concern about compliance with clause 1.5 of the Standards which requires that “the RTO’s training and assessment practices are relevant to the needs of industry and informed by industry engagement.” She found that there was continued non-compliance in that there was a failure to confirm consultation with industry to inform the development of the training and assessment strategies.[28]
[28] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 9, paragraph 12.
Certificate III in Scaffolding
Ms Duncan had previously found non-compliance with clause 1.7 of the Standards and expressed the opinion that the non-compliance continued in so far there was an inconsistent practice followed in respect of marking by different staff members and the LLN Assessment did not necessarily indicate whether or not any support was required.[29]
[29] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 14, paragraphs 19 – 20.
Certificate I in Skills for Vocational Pathways
Ms Duncan had previously found non-compliance with clause 1.5 of the Standards and this continued to be unsatisfactory. [30]
[30] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 19, paragraph 22.
Certificate III in Civil Construction
Once again concern was expressed by Ms Duncan in relation to clause 1.5 because the organisation was unable to demonstrate that its training and assessment strategies had been developed in consultation with industry. Ms Duncan observed that during the audit process the organisation provided to her a procedure to confirm the processes that would be undertaken to demonstrate that it had engaged with industry as required. She decided that the evidence demonstrated compliance with clause 1.5 but said that concerns remained about the validity of the data in relation to dating of forms.[31]
[31] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 26, paragraph 11.
Ms Duncan found that with regard to one student, the LLN Assessment indicated that a high level of assistance was required; that a Training and Support Plan had been developed but at a follow-up visit later in the year, there was no evidence to confirm what support was provided at the time or the plans for support at the next site visit.[32] Therefore, there was non-compliance with clause 1.7.
[32] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 26, paragraph 15.
Certificate IV in Civil Construction Supervision
Once again concern continued to be expressed by Ms Duncan about industry engagement in relation to compliance with clause 1.5.[33]
[33] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 28, paragraph 10.
Certificate II in Engineering Pathways
Ms Duncan said that the evidence did not demonstrate compliance with clause 1.7 because an individual who appeared to need possibly some help was not provided with it.[34]
[34] Exhibit 22, Applicant’s Bench Book, C02, NGD-08, the Duncan January 2020 Report, page 30, paragraphs 10 – 11.
Generally, the principal concerns of Ms Duncan relate to clauses 1.5 and 1.7.
Evidence of Mr Wallace
Mr Wallace gave evidence about this[35]. He said that the applicant had found it difficult to record the results of engagement with industry representatives because often they did not, despite requests, provide the signed forms which evidence the type and nature of the applicant’s consultation. He said that the applicant had designed a “Validation of Training and Assessment Strategies by Industry” form to be completed by an industry representative when the industry representative is reviewing a proposed delivery plan. He said that it is a slow process because there are delays from industry representatives completing and returning the signed form. I accept that evidence. However, Mr Wallace says that on or about 21 November 2019 the applicant had received a signed industry consultation form relating to the Diploma of Work Health and Safety which was one of the two non-compliant courses as assessed by Mr Duncan.[36]
[35] Exhibit 22, Applicant’s Bence Book, B07, Seventh Wallace Affidavit, paragraphs 6 – 7.
[36] Exhibit 22, Applicant’s Bence Book, B07, Seventh Wallace Affidavit, paragraphs 8 – 10.
In relation to the second identified non-compliance under clause 1.5 of the Standards concerning the Certificate I in Skills for Vocational Pathways Mr Wallace said that course is not aligned to a particular industry and therefore there is no readily identifiable industry to consult.[37] However, the applicant has now become a corporate member of the Australian Council for Adult Literacy and the applicant had intended to send its LLN trainers to attend a professional development course run by an affiliated state association of the Australian Council.[38] The current Corona-19 virus temporarily prevented that.
[37] Exhibit 22, Applicant’s Bence Book, B07, Seventh Wallace Affidavit, paragraph 54.
[38] Exhibit 22, Applicant’s Bence Book, B07, Seventh Wallace Affidavit, paragraph 58.
The credit of Mr Wallace was seriously challenged by the respondent. It was suggested to him that he had not drawn the above to the attention of Ms Duncan. He said that he had pointed out to her that there was no specific industry associated with the qualification and that it was her suggestion that he find alternative methods to get the feedback that he needed.
The respondent submits[39] that very serious criticism should be levelled at the applicant in its repeated attempts to omit and “bury” information from Ms Duncan. Mr Wallace conceded that he had failed and should have provided the respondent and the tribunal with material briefed to Ms Duncan to prepare the Duncan January 2020 Report. A report had been prepared by Ms Duncan in December 2019 (the Duncan December 2019 Report) and provided to the applicant. It was not marked as a draft. It was a stand-alone report. Neither the Duncan December 2019 Report nor the briefing material provided to Ms Duncan were provided to the applicant. The Duncan December 2019 Report itself was not provided until during the course of these proceedings. Mr Wallace said it was an oversight.
[39] Respondent’s closing submissions dated 10 July 2020, page 23, paragraph 70.
After the Duncan December 2019 Report was written and before it became the Duncan January 2020 Report some changes were made in it by Ms Duncan. In particular, some features that she had identified as areas of non-compliance were changed to areas of compliance. The respondent says correctly that the applicant did not seek to give any explanation of how the conclusions in the Duncan December 2019 Report were changed in the applicant’s favour when the Duncan January 2020 Report was filed.
This is a storm in a teacup. Ms Duncan, an expert witness, is the author of the reports. She could have been asked what prompted her to alter the document that she had written in December 2019 for it to become the document that she wrote in January 2020. If there was any doubt about the correctness of the opinions in the later report then she should have been asked about them. She was not asked. She was not called to give evidence and in its submissions the respondent says “Ms Duncan is clearly highly competent…… It is important to be very clear that no criticism is made of Ms Duncan by ASQA.”[40]
[40] Respondent’s Closing Submissions dated 10 July 2020, paragraph 69.
Doubtless, since the Duncan December 2019 Report was not labelled as a draft it probably should have been provided to the respondent but the oversight takes one nowhere when no challenge is made to the expert who made the change. She would not have made the change if it was not justified.
I have seen Mr Wallace give evidence on more than one occasion in these proceedings and they are complicated. Generally speaking, I accept his evidence.
Ms Duncan’s second concern related to Clause 1.7 of the Standards.
She found that there was non-compliance with Clause 1.7 in respect of Certificate III in Horticulture Production, Certificate III in Scaffolding, Certificate III in Civil Construction, and Certificate II in Engineering Pathways.
Mr Wallace gave evidence that on 3 February 2020 the applicant redesigned the LNN assessment process by updating the test and developing a new assessment guide.[41] No criticism has been levelled at the results of that process.
[41] Exhibit 22, Applicant’s Bence Book, B07, Seventh Wallace Affidavit, paragraph 28 et seq.
The evidence of Ms Barrand and Ms Duncan
In the recent hearing before me, expert reports were tendered. Ms Barrand reported for the respondent and Ms Duncan reported for the applicant. Neither was called as a witness and the reports were tendered by consent. Not surprisingly there was a great deal of common ground but there were some differences. That is inevitable given that some of the evidence is subjective. Nevertheless Ms Duncan has provided a number of reports throughout these lengthy proceedings and has worked with Mr Wallace to rectify identified issues. Ms Barrand brings a fresh mind to the issues but does not have the benefit of having worked with the applicant on the many issues that have been identified during the course of the respective audits. She was briefed specifically to review documents. The fact that opinions are said to legitimately differ as between the experts is a relevant matter for me to take into account when considering the behaviour of the applicant. Each witness found noncompliance with the Standards. Ms Barrand was merely providing an independent report whereas Ms Duncan, while providing an independent report, has been over a very considerable period of time, not only reporting but also advising and working closely with Mr Wallace on how he can improve the applicant’s compliance with the Standards.
Audit of twenty-four student files produced pursuant to section 26 notices
On 11 March 2020 the respondent issued a notice under section 26 of the Act requiring production of certain student files in relation to students who had completed units of competency after July 2019. These files became the subject of inspection by Ms Barrand and Ms Duncan. Ms Duncan prepared a report referred to as the First Duncan May 2020 report. She was asked whether in her opinion the material demonstrated compliance or non-compliance with the Standards. Ms Barrand was asked to give her opinion as to whether the evidence “positively demonstrated,” in relation to the documents produced, compliance with several clauses of the Standards.
The first question of Ms Barrand related to whether or not the applicant complied with clause 5.1 of the Standards. That standard requires that prior to enrolment the RTO provides advice to the prospective learners about whether the training product is appropriate to meeting the learners needs taking into account the individual’s existing skills and competencies. She concluded that the applicant did not comply.[42]
[42] Exhibit 22, Applicant’s Bench Book, D04, Report of Cilla Barrand dated 15 April 2020, page 4.
The second question to Ms Barrand related to clause 1.1 of the Standards and asked whether the training and assessment strategies and practices were consistent with requirements of training packages and VET accredited courses and enabled each learner to meet the requirements for each unit of competency. Ms Barrand concluded that the evidence did not positively demonstrate that the training, assessment strategies and practices, including the amount of training they provided were consistent with the requirements of training product packages and enabled each learner to meet the requirements for each unit of competency.[43]
[43] Exhibit 22, Applicant’s Bench Book, D04, Report of Cilla Barrand dated 15 April 2020, page 6.
The third question to Ms Barrand related to clause 1.2 of the Standards. She was asked whether the evidence positively demonstrated that the applicant determined the proper amount of training to be provided to each learner having regard to: the existing skills knowledge and experience of the learner; the mode of delivery; and where a full qualification is not being delivered, the number of units and/or modules being delivered as a proportion of the full qualification. She opined that the applicant had not determined the amount of training to be provided to each learner having regard to the existing skills knowledge and experience of the learner and the mode of delivery. [44]
[44] Exhibit 22, Applicant’s Bench Book, D04, Report of Cilla Barrand dated 15 April 2020, page 9.
The fourth question to Ms Barrand related to clause 1.7 of the Standards. It asked whether the evidence positively demonstrated that the applicant determined the support needs of individual learners and provided access to educational and support services necessary. Ms Barrand said that there was no evidence on the student files sampled to demonstrate that the applicant provided the relevant support services.[45]
[45] Exhibit 22, Applicant’s Bench Book, D04, Report of Cilla Barrand dated 15 April 2020, page 11.
The fifth question to Ms Barrand related to clause 1.8 of the Standards. She was asked whether the evidence positively demonstrated that the applicant implemented an assessment system that ensured that assessment complied with the assessment requirements of the relevant training package and was conducted in accordance with the Principles of Assessment contained in Table 1.8-1 of the Standards and the Rules of Evidence contained in Table 1.8-2 of the Standards. She concluded that a review of the evidence demonstrated that the applicant was not implementing an assessment system conducted in accordance with those documents.[46]
[46] Exhibit 22, Applicant’s Bench Book, D04, Report of Cilla Barrand dated 15 April 2020, page 15 et seq.
Ms Duncan was asked to consider the same files as Ms Barrand. She does not deal with the precise questions asked in the same way but she made 22 assessments and of that 22, 12 were found to be acceptable and 10 were found to be non-acceptable. Since neither Ms Duncan nor Ms Barrand were called to give evidence in the Resumed Hearing and I therefore did not have the advantage of hearing them give evidence, I would prefer the evidence of Ms Duncan where there are conflicts with the evidence of Ms Barrand because Ms Duncan has been intimately concerned with this matter and has worked with the applicant to assist it in overcoming identified noncompliance.
The applicant submits that the availability of material was relevant. The applicant submits that the applicant may have had additional evidence of compliance that had not been requested or provided pursuant to the section 26 notice to either expert. That assertion by the applicant appears to have some support from Ms Duncan. Furthermore, the applicant submits that in some instances, the available evidence which was the material requested by the respondent, was not sufficient for either expert to draw conclusions.[47]
[47] Applicant’s Closing Submissions dated 10 July 2020, pages 16 – 17, paragraph 96.
The applicant accepts that as late as May 2020 there were instances of non-compliance as identified in the First Duncan May 2020 Report.[48] Of particular concern was the fact that LLNs appear to have been completed after the course had begun rather than before the course began. The purpose of the LLN is to ascertain whether the student has the requisite skills to undertake the course and to ascertain whether the student needs particular support during the course. Obviously the LLN ought to be completed before enrolment. A second concern related to compliance with clause 1.1 of the Standards involving a failure to deliver a training program of suitable duration. Once again this is an important matter because a failure to provide a course of sufficient duration will result in an underqualified graduate.
[48] Applicant’s Closing Submissions dated 10 July 2020, pages 16 – 17, paragraph 96.
The applicant’s rectification action plan
Given that there are established defects or noncompliance with the relevant Standards in the applicant’s system, it is important to ascertain what the applicant intends to do in respect of them.
On 12 May 2020 Ms Duncan was instructed to review and consider a draft rectification plan prepared by the applicant and to confer with Mr Wallace to provide her opinion as to what further rectification action was required. Ms Duncan has done that and it is important to repeat that neither her qualifications nor integrity are in any way challenged. In the Second Duncan May 2020 Report Ms Duncan says:
“Having provided expert opinions on this matter over the preceding two years, it is my opinion that the RTO has and continues to work diligently to comply with and respond to requests for additional evidence from ASQA and improve its compliance with the Standards for RTOs 2015.”[49]
[49] Exhibit 22, Applicant’s Bench Book, C05, NGD-15, the Second Duncan May 2020 Report, page 23.
I refer to what I said on a previous occasion[50] when I adopted a statement of Professor Braithwaite:
“…Ultimately, the way ASQA should regulate for quality (as opposed to sufficiency) is to look at how well RTOs go about setting their own higher standards, checking if such standards are met, motivating through praise and encouragement and support when they have achieved improvement, and advising on options when they have not.”
Obviously, while there is a role for the respondent to do that, it must be remembered that ASQA’s role is regulatory. As a well-regarded auditor Ms Duncan continues to provide the assistance that the applicant needs.
[50] Brighton Pacific Pty Ltd and Australian Skills Quality Authority [2019] AATA 3645 at [106].
Surveys
The applicant is mandated to collect data each year. Mr Wallace says that since 1 May 2019, the applicant has delivered approximately 39,500 accredited Units of Competency to students and that to the best of his knowledge the respondent has not received any complaints from those students.[51] Due to the coronavirus there has not been a survey for 2020.
[51] Exhibit 22, Applicant’s Bench Book, B08, Eighth affidavit of Mr Wallace, page 4, paragraphs 31 and 32.
The 2019 learner surveys indicate that 94% of 828 responders from 9,093 surveys issued agreed or strongly agreed with the statement that they are satisfied with the training. 97% of those agreed or strongly agreed that they would recommend the applicant to others.[52] This is an impressive result, but I would be more inclined to place greater weight on a survey of employers.
[52] Exhibit 22, Applicant’s Bench Book, B09, Ninth affidavit of Mr Wallace, pages 13 – 14, paragraph 95.
A survey of employers resulted in 27 responders from 444 surveys issued and all of those agreed or strongly agreed that they were satisfied with the training and that they would recommend the training to others.[53]
[53] Exhibit 22, Applicant’s Bench Book, B09, Ninth affidavit of Mr Wallace,page 14, paragraph 95.
A student might be satisfied with the course because the student found it easy or does not know what they don’t know. One would expect an employer who would rapidly become aware of what the student does not know to be far tougher in completing a survey and I would be more inclined to pay attention to employer surveys than to student surveys. Of course, one cannot know whether one has access to all survey results but I assume that the results provided are accurate and they indicate satisfaction from students and employers.
Conclusion on the “education issues”
The applicant has been in the business for many years. The present proceedings have now been on foot for more than two years. The respondent asserts that the applicant has had plenty of time to ensure that it complies with all of the Standards. It asserts that the applicant’s performance is so poor in terms of its compliance that it should not be an RTO. At the conclusion of the First Hearing I remarked that Ms Duncan opined that there were a number of matters to which the applicant should attend and at that time she was not able to say whether her recommendations to bring the organisation into compliance had been attended to.
At the end of the second stage of the proceedings the applicant is in a similar situation. Ms Duncan as well as Ms Barron finds some noncompliance. Ms Duncan says that if Mr Wallace attends to the issues to which she draws attention, the organisation will become compliant. It is disappointing that over a long period of time it has failed to become compliant with all of the Standards. On the other hand, Ms Duncan speaks well of Mr Wallace and his efforts to bring the organisation into complete compliance. To refuse registration of an organisation is a step of last resort. Mr Wallace with expert guidance has made a serious and conscientious effort to comply with the Standards and has a detailed plan compiled with input from Ms Duncan to ensure compliance in the future.
After considering the evidence of Mr Wallace, Ms Barron and Ms Duncan in the present tranche of proceedings, as well as the evidence given during the First Hearing, and taking account of the continuing noncompliance with the Standards as well as the improvements that have been made since the original audit by Ms Sheppard, and the commitment by Mr Wallace to implement the rectification plan developed in consultation with Ms Duncan, I am satisfied that, but for the matters dealt with hereunder under Standard 7.1, the applicant should be registered as an RTO. That would be for a further limited period to ensure that it does, with the help of Ms Duncan, bring itself into complete compliance with the Standards.
However, given the continued non-compliance in some areas I would not extend the scope of its registration.
CONSIDERATION OF THE “FIT AND PROPER PERSON ISSUES”: THE STANDARD 7.1 ISSUE
Standard 7.1 provides as follows:
“7.1 The RTO ensures that its executive officers or high managerial agent:
a) are vested with sufficient authority to ensure the RTO complies with the RTO standards at all times; and
b) meet each of the relevant criteria specified in the Fit and Proper Person Requirements in Schedule 3”
Schedule 3 of the Standards provides:
“Fit and Proper Person Requirements
Criteria for suitability
In assessing whether a person meets the Fit and Proper Person Requirements, the VET Regulator will have regard to the following considerations:
a) whether the person has been convicted of an offence against a law of the Commonwealth or a State or Territory of Australia, or of another country, and if so, the seriousness of the offence and the time elapsed since the conviction was recorded;
b) whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO had its registration on the National Register cancelled or suspended by its VET Regulator for having breached a condition imposed on its Registration;
c) whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO was determined to have breached a condition of its registration under the Education Services for Overseas Students Act 2000 or the Tertiary Education Quality and Standards Agency Act 2011;
d) whether the person has ever become bankrupt, applied to take the benefit of a law for the benefit of bankrupt or insolvent debtors, compounded with his or her creditors or assigned his or her remuneration for the benefit of creditors, and if so, the time elapsed since this event occurred;
e) whether the person has ever been disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001, and if so, whether the disqualification remains in place;
f) whether the person was involved in the business of delivering courses or other services on behalf of a person that was the subject of regulatory action described in points b) or c) above, and if so, the relevance of the person’s involvement;
g) whether the person has ever provided a VET Regulator with false or misleading information or made a false or misleading statement to a VET Regulator, and if so, whether it is reasonable to assume that the person knew that the statement made or information provided to the VET Regulator was false or misleading;
h) whether the person has ever been determined not to be a fit and proper person as prescribed under any law of the Commonwealth or of a State or Territory of Australia, and if so, whether that determination remains in place;
i) whether the public is likely to have confidence in the person's suitability to be involved in an organisation that provides, assesses or issues nationally recognised qualifications;
j) whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO was determined to have breached a government training contract; and
k) any other relevant matter.”
Site Group International
Site Group International Ltd (SGI) is a company listed on the Australian Stock Exchange. Mr Vernon Wills became a director of SGI on 12 October 2010[54] and chairman of the board from that date until his resignation in March 2019 as sole director and CEO of SSG. Mr Wills holds approximately 15% of the shares in SGI. He is one of three directors.[55] From 29 May 2017, Mr Peter Jones was a director of SGI and since June 2019 has been the chair of SGI.[56] SGI carries on business through subsidiaries which include several RTOs. One of those is the applicant and another is a company described as Productivity Partners (PP).
[54] Exhibit 8, Supplementary T Documents, ST126 and Exhibit 21, Supplementary T Documents, ST134.
[55] Exhibit 8, Supplementary T Documents, ST134 and ST241.
[56] Exhibit 8, Supplementary T Documents, ST134.
Productivity Partners
SGI agreed to purchase all of the shares in PP in April 2014.[57] Prior to the purchase the CEO was Mr Cook and the day-to-day management and running of PP remained his responsibility until his resignation in March 2017 at which point Mr Wills became CEO of PP. By that time the company had ceased trading.
[57] Exhibit 7, Supplementary T Documents, ST112, Affidavit of Mr Wills dated 30 January 2018, paragraph 22.
PP traded under the name Captain Cook College (“CCC”). Upon the acquisition of PP by SGI on 30 June 2014 Mr Wills became one of three directors of PP on that date. An advisory board was established to advise on performance, compliance, marketing and strategic initiatives. The advisory board had day-to-day managerial responsibilities for the business of PP. Mr Wills was not a member of the advisory board as such, but periodically attended meetings.[58] The advisory board did not have responsibility for strategic direction. That remained with the directors of PP, the SGI executive and board. The advisory board was required to provide monthly reports to the SGI executive of which Mr Wills was Managing Director and CEO. Mr Wills was listed as a high managerial agent of PP from 13 November 2014 to 18 December 2016[59] and at that time owned approximately 19% of the fully paid ordinary shares in SGI. Significantly, for present purposes, in October 2015 he issued an “instruction” to PP on who would be acting CEO during the absence of the usual CEO.[60] This demonstrates his active involvement in PP at a crucial point in time.
[58] Exhibit 7, Supplementary T Documents, ST40.1; ST44.1; ST77.1; ST 91.1; Exhibit 6, Supplementary T Documents, ST14.
[59] Exhibit 20, Supplementary T Documents, ST147 page 4689.
[60] Exhibit 6, Supplementary T Documents, ST13.
I am also satisfied that Mr Wills was an executive officer of PP by virtue of his role as Managing Director, CEO, and member of the Chief Operating Management Committee of SGI.
The applicant
Mr Wills was a director of the applicant from 12 October 2010 and an executive officer as defined from 3 April 2012 when the applicant became registered as an RTO. He was the sole director and CEO of the applicant until 26 March 2019 and gave instructions in this matter until that time.[61] He resigned as the CEO and Director of the applicant on 26 March 2019.
[61] Exhibit 7, Supplementary T Documents, T108.
PP compliance problems
In February 2015 the PP admissions team became aware of improper conduct by one of its agents.[62] There was evidence of agents completing quizzes for prospective students.
[62] Exhibit 20, Supplementary T Documents, ST185.
On 17 March 2015 PP’s own documents show that 46.4% of 140 students had never accessed learner content for more than 90 days and that 21.3% of 656 students had never accessed learner content at all.[63] On 17 March 2015 an email chain involving Mr Wills indicates his awareness of, and concern in relation to events that are occurring.[64]
[63] Exhibit 20, Supplementary Documents, ST168.1.
[64] Exhibit 7, Supplementary T Documents, ST47, ST48. See also some concern expressed in an email chain of 20 September 2015 between Mr Wills and Mr Cook at Exhibit 6, Supplementary T Documents, ST10.
In May 2015 PP commissioned an audit report by Newberry Consulting (Newberry) to assess the extent of compliance with the Standards. The report found PP to be substantially non-compliant. In July 2015, Newberry was provided with rectification evidence but PP was found to be still non-compliant with some of the Standards. It is also clear that at about this time there was concern to increase the number of enrolments.[65] The respondent submits,[66] and I accept, that Mr Wills’ attention was regularly brought to matters concerning third-party compliance and referral agent practices;[67] PP enrolment practices[68] and PP educational attainment.
[65] Exhibit 6, Supplementary T Documents, ST7; ST12; Exhibit 20, Supplementary T Documents, ST172.
[66] Exhibit 22, Applicant’s Bench Book, A15, page 7, paragraph 21.
[67] Exhibit 6, Supplementary T Documents, ST7; ST9; ST10; S11; ST15; ST16; ST17; Exhibit 7, Supplementary T Documents, ST48; ST63; ST99; ST90; ST91..
[68] Exhibit 6, Supplementary T Documents, ST7; ST7.1; Exhibit 7, Supplementary T Documents, ST47; ST48; ST58; ST91; ST90; Exhibit 21, Supplementary T Documents, ST 233.
During the year 2015 PP was having trouble not only complying with the performance standards, it was also having trouble meeting increased revenue demands. On 20 August 2015 the CEO of PP sent an underperformance report to Mr Wills.[69] PP had achieved only 14% of the imposed revenue target in the month of July 2015. Financial pressure continued and on 28 September 2015 Mr Wills wrote to “Joe and fellow directors”. In the course of that letter he said:
“Early indications are the changes to enrolment and activating marketing are showing significant increases in registrations and should show an upswing in C1 [students who pass census date number 1] and C2 [students who pass census date number 2].[70]
[69] Exhibit 6, Supplementary T Documents, ST8.
[70] Exhibit 6, Supplementary T Documents, ST12 p51.
Two years later, on 16 March 2017 a compliance report was provided to PP. That report asserted as follows:[71]
a. between 1 January 2013 and September 2016 PP enrolled 9,983 online enrolments;
b. 7,546 students completed 0 units of competency;
c. Students who achieved no units of competency were charged a total of $72,443,272.68 in the VET FEE HELP representing 83.62% of the entire amount of the VET FEE HELP money claimed by PP since 2013;
d. Of the 9983 enrolments, 165 were issued qualifications representing a completion rate of 1.65%.
e. 3319 enrolments completed zero units of competency and in addition progressed past the first census date and were charged a total of $22,660,542.68 for second, third or fourth census dates – representing a total of 26.16% of the total monies charged;
f. 7,518 of the 9,983 online enrolments occurred in the period 1 July 2015 – 31 December 2015 and they were charged $55,554,104.18. Of those enrolments 36 students (0.47%) were issued with qualifications and only 124 completed a unit of competency.
[71] Exhibit 6, Supplementary T Documents, ST30, page 3124 - 3125; Exhibit 4, T7.
That report also analysed the performance of the recruitment agencies with the largest number of enrolments in the RTO in the period 1 July 2015 to 31 December 2015:
a. GTRS – 2039 enrolments – 0 course completions – 7 students with a unit of competency (UOC) completed – 129 instances of agent misrepresentation reported;
b. Study from Home – 1035 enrolments – 0 course completions – 1 student with a UOC completed – 41 instances of agent misrepresentation reported;
c. Let’s Get Qualified – 767 enrolments – 0 course completions – 2 students with a UOC completed – 23 instances of agent misrepresentation reported;
d. Career Developer – 749 enrolments – 1 course completion – 5 students with a UOC completed- 49 instances of agent misrepresentation reported;
e. iEducate – 317 enrolments – 0 course completions – 3 students with a UOC completed – 7 instances of agent misrepresentation reported.
That report also summarises PP’s course approval monitoring log which shows 107 complaints relating to 47 agents responsible for 3,636 VET FEE-HELP enrolments between 1 July 2015 and 31 December 2015. 3,301 of those students completed no units of competency and were charged total of $25,466,500.
A further compliance monitoring report of the respondent of 27 March 2017 stated a preliminary view in relation to the non-compliance with the NVR Act by PP and concluded that:[72]
“Having regard to the totality of the available information and in the context of the fit and proper person requirements… (… particularly items (i) and (k) of the criteria for suitability) the RTO and its executive officers and high managerial agents are not fit and proper to be involved in or registered as an RTO.”
[72] Exhibit 20, Supplementary T Documents, ST135, paragraph 66.
That report also advised PP of a notice of intent to cancel its registration as an RTO (I include the above quote merely to complete the history).
PP was given the opportunity to respond by notice dated 13 April 2017.[73]
[73] Exhibit 20, Supplementary T Documents, ST137.
On 27 April 2017 Mr Wills sought a meeting with the Honourable Michael Lavarch, Commissioner of ASQA to discuss ASQA concerns about PP including the notice of intent. Mr Lavarch declined to meet Mr Wills.[74]
[74] Exhibit 20, Supplementary T Documents, ST139.
On 5 May 2017 PP applied to withdraw its RTO and CRICOS[75] registrations.[76] ASQA advised Mr Wills that PP’s response to the notice of intent was relevant to any decision to allow it to withdraw its registration.[77]
[75] CRICOS meaning “Commonwealth Register of Institutions and Courses for Overseas Students.”
[76] Exhibit 20, Supplementary T Documents, ST140.
[77] Exhibit 20, Supplementary T Documents, ST141.
On 16 May 2017 Mr Wills responded to ASQA seeking an immediate decision on the application for withdrawal[78] and that was declined on 18 May 2017.[79]
[78] Exhibit 20, Supplementary T Documents, ST142.
[79] Exhibit 20, Supplementary T Documents, ST143.
On 22 May 2017 PP, through its solicitors, responded to the ASQA notice of intention to cancel noting that “[g]iven that the college has asked for registrations to be withdrawn there is in its view, little, if any, utility responding to the invitation contained in your letter under reply”. PP denied that there had been any unethical conduct by the college or its executive officers.[80]
[80] Exhibit 20, Supplementary T Documents, ST144; ST144.1.
On 16 June 2017 ASQA notified Mr Wills as CEO of PP of its decision to cancel its registration[81] which included the matters set out in the compliance report quoted above. The decision was to take effect from 21 July 2017.
[81] Exhibit 6, Supplementary T Documents, ST26, page 3039.
On 11 August 2017 Deloitte provided an addendum to an earlier report of 6 October 2016 based on further information provided by PP.[82] That report contains the following:
[82] Exhibit 7, Supplementary T Documents, ST118.
“16. The data examined by Deloitte demonstrated that of students enrolled from 1 January 2015 to 31 December 2015:
16.1 16.1 80% of students (4809 students) never logged on to the LMS at all…
16.2 Of the 80% or 4809 students that never logged on…
16.2.1 39% of students (1859 students) never had any contact or communication with the College after the initial enrolment call;
16.2.2 a further 25% of these students (1200 students) spoke to the college but only about acquiring a computer, withdrawing from the course or both, and
16.2.3 a further 36% of the students (1750 students) spoke to someone at college and discussed something related to the course, but never went as far as actually logging into the LMS…
17 Based on the results of our audit of the 6034 students enrolled with Productivity Partners through VET fee help, there were 3059 students or 50.6% of students who had not logged into the LMS at all, had not communicated with PP or had only communicated with PP to withdraw or to get a free computer.
…
Of the 1859 students we identified as having no two-way communication with PP, 28 students had fees reversed.”
In an audit report by Mr Newbery who conducted a site audit on 20 and 21 May 2015 and then reviewed rectification on 24 July 2015 he said:
The result of this audit may appear negative, however the result does not reflect the good practice that the organisation is applying. It is clear that Productivity Partners apply a high ethical approach to the delivery of services to its students and overall the organisation is considered to be an excellent RTO that simply needs to address some minor non-compliances”[83]
[83] Exhibit 7, Supplementary T Documents, ST57.
This is somewhat at odds with the finding that of 7518 students enrolled in the second half of 2015 only 124 completed a unit of competency and the fees were $55,554,104.18.[84]
[84] Exhibit 20, Supplementary T Documents, ST135, page 4513.
PP applied to this tribunal to review the decision of ASQA on 13 July 2017. That has not been heard.
On the first day of the Resumed Hearing in this tribunal, the applicant sought clarification from the respondent as to the nature of the case being pursued under clause 7.1 of the Standards. Counsel for the respondent said,
“We are relying upon our [Statement of Fact’s Issues and Contentions (SFIC)] and on the documents referred to in our SFIC
….
ASQA I think has clearly pleaded Mr Wills’ involvement in PP from the time SGI acquired PP on 30 June 2014 and we’ve clearly set that out that he was a home (sic) managerial agent from December 2014;
….
all ASQA needs to do is rely upon to raise the ground, it’s relying upon – it’s already made this decision [i.e. the Productivity Partners decision]. These are the reasons that we made the decision. We’re not second guessing our decision. We rely on it. But we’re in the tribunal.”
The applicant contends that the respondent is confined to the matters contained in particular paragraphs of its SFIC because the purpose of a SFIC is to identify the facts in issue in the proceedings. [85]
[85] Yousif v Workers’ Compensation Regulator [2017] ICQ 4 at [15]; Wyborn and Tax Agent's Board of New South Wales [2007] AATA 1492 at [137].
The applicant submits that nowhere in the SFIC is there an articulated connection between, on the one hand, anything that did or did not occur in PP and Mr Wills, on the other hand.[86] The applicant submits that there is a requirement that the respondent particularise precise facts, matters and circumstances on which it relies to make an extremely serious finding about Mr Wills, namely that he is not a fit and proper person.
[86] Applicant’s Closing Submissions dated 10 July 2020, page 37, paragraph 213.
It is true that the respondent does not particularise a specific fact that Mr Wills performed in PP. However, the material which is voluminous fully apprises him of the conduct of PP during his time as a director and high managerial agent. The material shows that he was aware of concerns about events that were occurring in PP in relation to its agents. He was given an opportunity to respond on behalf of PP to ASQA when it proposed to cancel PP’s registration. I take account of the fact that the Deloitte report quoted above post-dated the decision of the respondent to cancel the PP registration and that therefore at the time Mr Wills was not offered an opportunity to respond to that report. However, Mr Wills has had that opportunity in these proceedings and he did not take it.
The respondent contends[87] that the applicant, from at least July 2017 (i.e. after the PP decision) to March 2019 (when Mr Wills resigned as sole director and CEO of the applicant), failed to ensure that Mr Wills as its sole director and CEO was a fit and proper person who complied with the criteria in Schedule 3 of the Standards, namely criteria (b), (h), (i) and (k).
[87] Exhibit 22, Applicant’s Bench Book, A15, page 2, paragraph 3.
Secondly it contends that after the date of Mr Wills resignation as sole director and CEO the applicant continued in non-compliance because Mr Wills remains an executive officer as defined.
Further and alternatively the respondent submits that the applicant’s response to a demonstrated failure by Mr Wills, Mr Wallace and Mr Jones who became a director on 29 May 2017 and chair since 30 June 2018, to meet the criteria in Schedule 3 of the Standards is a further illustration of the applicant’s ad hoc approach to remedying specific examples of non-compliance put in issue by the respondent.
Interpretation of Schedule 3 of the Standards
Standard 7.1 requires an RTO to “ensure that its executive officers or high managerial agent meet each of the relevant criteria specified in the Fit and Proper Person Requirements in Schedule 3.”
That appears to be a mandatory obligation on the RTO and the use of the word “each” suggests that the RTO must ensure that every executive officer or high managerial agent is compliant with every one of the matters listed. However, the provisions of Schedule 3 of the Standards which impose an obligation, not on the RTO, but on the VET regulator, require the regulator to “have regard to” a number of considerations and those considerations involve the exercise of judgement. For example, one of the matters the regulator must take into account is whether or not a person has been convicted of an offence, and the seriousness of the offence and the time since a conviction. Schedule 3 does not say that a person who has been involved in any of the conduct that is set out in the Schedule is automatically disqualified from being a “Fit and Proper Person”. Furthermore, the decision maker is not confined to the particular matters specified in Schedule 3 because it may take into account “any other relevant factor”.[88]
[88] Echelon National Security Agency Pty Ltd and Australian Skills Quality Authority [2014] AATA 438 at [56-58]; Achieve Goals Pty Ltd and Australian Skills Quality Authority [2019] AATA 1239 at [106-109]; Hughes and Vale Pty Ltd v NSW (No2) (1955) 93 CLR 127 at 166.
The meaning that is to be attributed to what appears to be mandatory words imposing an obligation on the RTO as set out above is that the RTO must ensure that its executive officers or high managerial agents are fit and proper people having regard to the matters set out in Schedule 3 of the Standards and other matters if the decision maker so decides so long as they are relevant to the issue of “fit and proper person”. That amounts to imposing on the RTO the same obligation that is imposed on the VET regulator.
The first issue: has Mr Wills been an executive officer of SSG since his resignation as director and CEO in March 2019?
This question is appropriately dealt with first because if it is determined adversely to the respondent, it is probably unnecessary to determine the remaining issues under Standard 7.1.
Prior to March 2019 there is no doubt that Mr Wills was an executive officer of the applicant but he resigned as CEO and director on 26 March 2019 and the applicant submits that he does not fall within the definition of executive officer after that date because he has not been concerned in or taken part in the management of the applicant since that date. The applicant submits that after that date Mr Wallace assumed the responsibility of chief executive officer of the applicant and he reports to the board of the applicant.
Pursuant to section 3 of the Act, Mr Wills is an executive officer if he is “concerned in, or takes part in, the management of the organisation” or “if he is a person who at any time during a period for which the organisation is registered, is entitled to receive 15% or more of dividends paid by the organisation.”
The respondent contends that Mr Wills is an executive officer because:[89]
(a)In his role as director of SGI he is concerned in setting the strategic direction and overall direction of the operations of the applicant;
(b)Mr Wills has an entitlement to receive 15% or more share in the dividends of SGI, which is the holding company of SSG.
[89] Exhibit 22, Applicant’s Bench Book, A15, page 20, paragraph 66.
The SGI Financial Report for the Year Ended 30 June 2019 (the SGI June 2019 Financial Report)[90] states:
“The Group has organised its business into four separate units based on the products and services offered – the Chief Operating Decision Makers (“CODM”), being the Directors and Executive Management of the company, review the results on this basis.
…
The CODM monitors the operating results of its business units separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit/loss consistent with the operating profit/loss in the consolidated financial statements.”
[90] Exhibit 22, Applicant’s Bench Book, E07, Other Party’s Additional Documents, page 645; Exhibit 29, page 53.
When Mr Wills, was the managing director and the CEO of SGI he was a chief operating decision maker of the applicant. After his resignation as Managing director and CEO of SGI he continued on as a director and as a member of the CODM.
The SGI Annual Report for the year ended 30 June 2015 signed by Mr Wills on 26 August 2015 states in respect of SSG[91]:
“With over 10,000 students coming through the Site Skills Training Domestic Facilities each year for short courses, management remains focused on improving the operating margins through cross selling and up selling strategies as well as the use of initiatives such as digital learning resources and revised pricing models.”
[91] Exhibit 22, Applicant’s Bench Book, E07, Other Party’s Additional Documents, page 535.
The SGI June 2019 Financial Report in which Mr Wills is described as Managing Director and CEO states:
“Site continues to expend significant operational resources ensuring that SSG remains compliant to achieve the favourable outcome in the AAT…”[92]
[92] Exhibit 29, page 11.
That report was signed by Mr Wills on 30 August 2019 and affirms the statement made in earlier reports concerning the Chief Operating Decision Makers.[93]
[93] Exhibit 29, page 53.
The submission on behalf of the applicant is that Mr Wills merely maintains overall direction and is responsible for the strategic plan. Mr Wallace gave evidence that after the departure of Mr Wills as sole director and CEO of the applicant, he reports only to Mr Jones and has had no discussions with Mr Wills or anyone higher in the governance chain. The respondent submits this evidence should be rejected. However, that evidence is not inconsistent with what is contained in the SGI June 2019 Financial Report set out above.
In Commissioner of Corporate Affairs v Bracht (Bracht) [94] Ormiston J said:
“There must be an element of decision-making, which affects the corporate enterprise as a whole, that those responsible need not form part of the board, nor even need they be executives directly communicating with the board. Nevertheless, in the ordinary course of affairs, it is only in a large company that persons outside this latter category, so far removed from the power of control exercised by the directors, be engaged in the management of a company
….
It may be difficult to draw the line in particular cases, but in my opinion the concept of “management” for present purposes comprehends activities which involve policy and decision-making, related to the business affairs of a corporation, affecting the corporation as a whole or a substantial part of that corporation, to the extent that the consequences of the formation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs.”[95]
[94] [1989] VR 821.
[95] supra at 830.
That passage was cited without criticism by Nettle and Gordon JJ in Australian Securities and Investments Commission v King [2020] HCA 4 at[111].
The words “concerned in” were considered in Bracht by Ormiston J. He said:[96]
“Nevertheless the concept of “being concerned in” a particular activity connotes participation at a variety of levels and differing intensities. Essentially the section is protective and as was said by Quilliam J in R v Newth at 761, it prohibits a person “from taking any hand in the real business affairs of the company”. Perhaps I have given the word “management” a somewhat wider meaning, but the level of participation to which the section refers may be relatively modest”.
[96] supra at 831.
The applicant and the Other Party submit that there is no evidence demonstrating active participation by Mr Wills in the business of SSG after his resignation as director apart from being a director of the parent company SGI. Involvement in the management of a parent company does not of itself make a person an executive officer of a subsidiary.[97] It is a question of extent and is affected by a variety of factors.
[97] Australian Securities and Investments Commission v Vines (2005) 55 ACSR 617 at [1055]-[1056].
In the present case I am satisfied that as a member of the CODMC, (having resigned as its chair in March 2019), Mr Wills is concerned in evaluating segment performance, making decisions about “performance assessment”, and “resource allocation” to, individual companies in the group. That must involve a consideration of the needs of the subsidiary, and evaluation of areas of operations to which resources should be allocated.
Mr Wills held approximately 18% and holds approximately 15% of the shares in SGI and had prior to his resignation in March been the CEO. The situation is not comparable to that of a very large public company which is a holding company.
I am satisfied that Mr Wills was “concerned in or takes part in” the management of the applicant after his resignation in March 2019 as a director of the applicant. There is no evidence that I accept which demonstrates that situation has changed. Mr Wills was and continues to be an executive officer of the applicant.
The respondent has a second limb to the argument that Mr Wills falls within the definition of executive officer because of the extent of his shareholding. The respondent submits that Mr Wills has an entitlement to receive a 15% or more share in the dividends of SGI, the holding company of the applicant.
The Respondent refers to the 2019 annual report where it is suggested that Mr Wills records owning approximately 18% of[98] the issued shares.
[98] Exhibit 22, Applicant’s Bench Book, A15, page 22, paragraph 66(b).
The argument on behalf of Mr Wills is that SGI, the holding company of SSG, and not Mr Wills, is entitled to receive any dividends paid by SSG and that ASQA has ignored the separate legal personality of the corporation.[99]It is submitted by the Other Party that there was a share issue that took Mr Will’s interest directly and indirectly (personally and with his wife through a superannuation fund) to 14.7% of the issued shares in SGI.[100]
[99] Exhibit 22, Applicant’s Bench Book, A18, page 7, paragraph 64.
[100] Exhibit 22, Applicant’s Bench Book, A19, page 9, 42.
There is a relevant distinction between the words used which refer to “a person who is entitled to receive 15% or more of the dividends paid by the organisation” and “a person who is either in his own or her own right or jointly with another person entitled to receive 15% or more of the dividends paid by the organisation or a holding company of the organisation.”
Regardless of the shareholding of Mr Wills he is not entitled to receive 15% or more of the dividends paid by the applicant. The applicant is a wholly owned subsidiary of SGI and any dividends are paid to SGI. Mr Wills is entitled to a dividend from SGI – not the applicant. The RTO is the applicant. The entitlement to receive dividends from SGI does not give Mr Wills a right to receive dividends from the applicant. It is unnecessary for me to determine the extent of his shareholding which may be just below or just over 15% of SGI.
In short, I am satisfied that Mr Wills was and continues so far as the evidence establishes, to be an executive officer of the applicant because of his concern in the management of the applicant. He is not an executive officer by virtue of his shareholding.
The second issue: paragraph(b) of Schedule 3 to the Standards
This schedule provides “whether the person has ever been an executive officer or high managerial agent of an RTO at a time that the RTO had its registration on the National Register cancelled or suspended by its VET Regulator for having breached a condition imposed on its Registration…”
Mr Wills was a director of PP when it had its registration cancelled in June 2017. At that particular time he was also its CEO.
Two questions arise here. The first is whether PP had its registration cancelled for “having breached a condition imposed on its registration”. The second is to what effect, if any, does the fact that PP applied to this tribunal for a review of the decision to cancel its registration have.
The respondent submits that the term “a condition imposed on its registration” should be read as referring to all the conditions that relate to the registration of the organisation. Sections 22 to 28 of the Act, specify a number of conditions that apply to RTOs. Section 29 of the Act provides:
(1) The National VET Regulator may impose other conditions on an NVR registered training organisation’s registration. Such conditions need not be imposed at the time of registration.
(2)The National VET Regulator may vary or remove a condition imposed under subsection (1).
The Other Party submits that there is a distinction between two types of conditions of registration. The conditions in the first category in sections 22 to 28 of the Act operate by law in the case of every RTO. The second category of conditions are those which may be imposed on the organisation by ASQA. The conditions imposed on registration are treated differently from those in sections 22 to 28 of the Act. They can be varied. Under section 30 of the Act the respondent must give reasons for a decision to impose conditions and must record those conditions that have been imposed on the National Register. Furthermore section 29 of the Act itself draws a distinction between the conditions that are set out in sections 22 to 28 and the conditions that have been imposed under subsection 29(1).
If the draughtsman of subparagraph (b) of Schedule 3 to the Standards had intended that provision to apply to a breach of the conditions specified by sections 22 to 28 of the Act there is no need to use the word “imposed.”
There was no condition “imposed on the organisation’s registration” and paragraph (b) of Schedule 3 to the Standards has no application.
The third issue: paragraph(h) of Schedule 3 to the Standards
Paragraph (h) of Schedule 3 to the Standards requires a consideration of whether Mr Wills has “…ever been determined not to be a fit and proper person as prescribed under any law of the Commonwealth or a State or Territory of Australia, and if so, whether that determination remains in place...”
The respondent submits that the appropriate course for this tribunal is in effect, not to draw a conclusion from the decision by ASQA, but rather to look at the matters that were investigated by ASQA in relation to PP, the way it was investigated, what findings arose from those investigations, what they put to PP and what opportunity PP had to respond and the nature of the response, and then it’s decision. The Other Party suggests that this is a “halfway house” approach which is incoherent.[101]
[101] Other Party’s Closing Submissions on the Standard 7.1 Issue dated 10 July 2020, page 20, paragraph 70.
It is true that Mr Wills has been found to be not a fit and proper person by the respondent in relation to PP. However, that decision is subject to a review in this tribunal and its operation has been stayed. In the exercise of my discretion, I will not have regard to the fact of the making of the decision.
The fourth issue: paragraph (i) of Schedule 3 to the Standards
The issue here is “whether the public is likely to have confidence in the person’s suitability to be involved in an organisation that provides, assesses or issues nationally recognised qualifications.”
I am satisfied that the approach that I should take is to have regard to matters giving rise to the ASQA decision in PP and not to the decision itself which is subject to review. In considering the material before ASQA, I must take account of and give appropriate weight to whether or not a matter was challenged by Mr Wills or the applicant at the time.
The material which I have quoted earlier under the heading “PP compliance problems” and in paragraphs 79, 80 and 90 is purely statistical and it is extracted from the records of the applicant. If it was incorrect it could have been challenged by evidence in these proceedings by or on behalf of Mr Wills. It shows performance that can only be described as disastrous.
By way of contrast the Other Party relies on reports such as that referred to earlier by Mr Newberry and a report by JCT Business Solutions[102] but these are reports that involve value judgements.
[102] Exhibit 20, Supplementary T Documents, ST144.3.
While accepting that Mr Wills was not the CEO of PP at the time, he was a director. He cannot escape his obligations as a director and high managerial agent which is defined as an employee or agent with duties of such responsibility that his or her conduct may fairly be assumed to represent the organisation in relation to the business of providing courses.
The current proceedings were split. The first part of the proceedings dealt with matters other than the issue of “fit and proper person”. The second part of the proceedings dealt with the issue of “fit and proper person” in compliance with Schedule 3 of the Standards. I also gave leave to deal with other compliance issues occurring since the First Hearing. Leave was granted to Mr Wills on his application to enable him to be joined as the Other Party. He is a man who had a vital interest in these proceedings insofar as his reputation was at stake. He chose not to go into the witness box.
Submissions have been made that Mr Wills has not been accorded natural justice. He has. The whole purpose of Mr Wills being joined as the Other Party and for these adjourned proceedings – the Resumed Hearing – was to enable him to be heard on the fit and proper person issue in relation to his conduct in PP and in the applicant. Counsel for Mr Wills pointed out that the respondent was aware of the PP cancellation decision including its fit and proper person findings in the lead up to the making of the decision in this matter, and yet extended the scope of the applicant’s course accreditation and therefore must have been satisfied that the applicant complied with the Standards. The Respondent did not raise the issue of Mr Wills’ involvement at that point in time. There is no evidence as to why that occurred but the decision is now for the tribunal to make.
On 24 November 2014 a Senate Standing Committee was established to enquire into the operation and regulation and funding of private vocational education and training providers in Australia.[103]
[103] Exhibit 6, Supplementary T Documents, ST6.
On 15 December 2014 Mr Wills attended a meeting of PP at which concerns were expressed concerning agents Sero Learning and Healthcheck and the nonengagement of students and enrolling students that “never accessed” the service.[104]
[104] Exhibit 6, Supplementary T Documents, ST5.
By that date a number of complaints had been made that should have troubled PP greatly. I will refer to one:
“I’m troubled about something can you help? yesterday had a couple of Indian salespeople apparently representing your school, telling me that I can do a course and it’s ALL FUNDED by NSW GOVERNMENT which includes a FREE LAPTOP and upon completion of said course I will receive a FREE IPAD to keep? when they asked for my Tax File Number and all my I.D. including Passport no’s I got concerned about a SPAM THEFT ARE YOU and your company associated with anything mentioned above? I’ve also forwarded this to government department for further investigation.”[105]
[105] Exhibit 7, Supplementary T Documents, ST100, page 3935.
On 10 March 2015 CCC (PP) was advised by the Senate Inquiry that a submission had been received delivering adverse comment regarding the college and the college was offered a chance to respond. On 1 March the College was approached by the ABC seeking a response regarding comments made by a former student. Mr Wills was aware of these matters. [106]
[106] Exhibit 6, Supplementary T Documents, ST6.
On 17 March 2015 it is clear that concern was being expressed within the College about the behaviour of various agents and there appears to be a desire to rectify problems.[107]
[107] Exhibit 7, Supplementary T Documents, ST48; ST 170 and171
In an email dated 13 May 2015, which Mr Wills was copied into, the following passage appears:
“As we discussed on the phone, Captain Cook College was the focus in one of nine submissions released by a senate inquiry today. Those released today contribute to a total of 71 submissions that the inquiry has received. Of the nine released today, CCC been the only provider adversely mentioned and as a result it is anticipated that we will likely receive media attention.”[108]
[108] Exhibit 6, Supplementary T Documents, ST6,CCC is the trading name of PP.
The legal advice received by PP under the email subject line “Management of potential media scenario” was that on initial impression the “student lacks credibility and is semi-literate! Consequently, I am inclined to adopt a minimalist response….”[109]
[109] Exhibit 6, Supplementary T Documents, ST6.
In an email dated 20 September 2015[110] Mr Wills refers to there being “information in the public arena surrounding some unethical agents.” He says that while he is willing to accept that “they may not all be unscrupulous there remains significant commercial risk if we get it wrong.” Further, Mr Wills says:
“Understandably our Risk and Audit Committee will expect that management has undertaken an absolutely rigorous investigation, analysis and all prerequisite measures to ensure the purity of process to the best of our capability. This needs to be clearly articulated in writing with contribution from all areas including group services and compliance. It cannot be a simple facet of continuous improvement. By its very nature it requires the checks and balances to be fully dealt with.”
[110] Exhibit 6, Supplementary T Documents, ST10.
Mr Wills makes it clear in this email and in an earlier email on the same day[111] that it is incumbent on the organisation to have proper checks on agents. However, that is 10 months after the Senate Inquiry has been established, and after serious allegations have been made against this company. It is also significant that there was a concern in the management of the College to increase the number of students as I have mentioned in paragraph 78. Even if PP was benefiting from the work of dishonest agents before the Senate enquiry was established one would expect it to have its house in order shortly after the establishment of the Inquiry, and after receiving some adverse publicity, and at the absolute latest by 30 June 2015. However according to the 16 March 2017 compliance report quoted earlier, between 1 July 2015 and 31 December 2015 there were 7518 online enrolments. They were charged $55,554,104.18. Only 124 of those students completed a unit of competency and only 36 of them were issued with qualifications. The matter speaks for itself.
[111] Exhibit 6, Supplementary T Documents, ST10.
In fairness it must be said that on 10 December 2015 when CCC received a call from an officer of the West Australian Government concerning Course Advisor practices in and around Looma, Western Australia, it did take action to investigate the matter.[112] Two things must be said about that. The first is that it required a referral from Consumer Protection in the Western Australian Government to initiate the investigation. The second is that this occurred about a year after the establishment of a Senate Inquiry.
[112] Exhibit 7, Supplementary T Documents, ST99.
The company at best was totally dysfunctional. To put it succinctly, and colloquially, the VET fee help system was being rorted[113] throughout 2015.
[113] A word appearing in the Oxford English Dictionary and being described as chiefly used in Australian politics meaning to engage in fraudulent or dishonest manipulation of a system.
Mr Wills was a director of PP during this period. He was listed as high managerial agent. He had an interest in the holding company, between 15% and 20% of the share capital, and was CEO and managing director of the holding company. The matters referred to above in relation to PP occurred over a long period of time during most of which he was a director and high managerial agent. He knew or should have known of them and should have appreciated that they were extremely serious matters involving a great deal of money.
The respondent criticises Mr Wills on the basis that he has made unsubstantiated criticisms of it that would be potentially corrosive of public confidence in it. I see no merit in this point.
I have found that Mr Wills continues to be an executive officer of the applicant.
Is the public likely to have confidence in Mr Wills’ suitability to be involved in the applicant organisation? This calls for the application of the common sense of the reasonable man. For this purpose and in this particular case I put aside the issue of the standard of education that the applicant provides or that PP provided.
Conclusion on the “fit and proper person issue”
In relation to Mr Wills, I find that:
(a)He was a high managerial agent of PP. By definition, such a person is an employee or agent of the organisation with duties of such responsibility that his or her conduct may fairly be assumed to represent the organisation in relation to the business of providing courses.
(b)He was a director of PP.
(c)The performance of PP was such that large sums of money were paid to it, a minimal number of students completed courses; about half the students did not even login to a course for which they were enrolled and most of this happened when the concerns about the VET Fee help system were well-known to Mr Wills.
(d)To express the concerns to which I have referred was inadequate. The abuse of the VET fee help system was obvious and on a grand scale. He should have stopped it promptly. Whatever steps were taken were inadequate.
I am satisfied that, applying the Briginshaw standard,[114] the public is not likely to have confidence in Mr Wills’ suitability to be involved in an organisation that provides, assesses or issues nationally recognised qualifications. I am satisfied that the applicant does not satisfy the fit and proper person requirements in Schedule 3 of the Standards and does not adequately comply with Standard 7.1.
[114] Briginshaw v Briginshaw (1938) 60 CLR 336.
Evidence has been provided from Mr Elder and Mr Wall attesting to Mr Wills good character, his business skills and his work in the field of vocational education. I have considered that evidence but it does not dissuade me from my conclusions.
I make no findings in relation to Mr Wallace or Mr Jones.
DECISION
Were it not for the Other Party’s continued involvement in the applicant as an executive officer I would be inclined to allow the application in relation to registration for a limited period of three years.
I affirm the decisions under review.
I certify that the preceding 166 (one hundred and sixty -six) paragraphs are a true copy of the reasons for the decision herein of Deputy President R I Hanger AM QC
.................................[SGD].......................................
Associate
Dated: 30 November 2020
Dates of hearing: 15, 16, 17, 20, 21, 23, 24 May 2019
6, 7, 8, 10 July 2020
Date final submissions received: 24 July 2020 Counsel for the Applicant: S McLeod and M Wilkinson Solicitors for the Applicant: Hopgood Ganim Lawyers Counsel for the Respondent: M Brennan and S Wright Solicitors for the Respondent: Australian Government Solicitor Counsel for the Other Party: J Giles and P Knowles Solicitors for the Other Party: Minter Ellison
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