NSW Tribunal Upholds Cancellation of Service Approval Due to Non-Compliance

The applicant's service approval was cancelled by the regulatory authority due to non-compliance with national laws and regulations. The Tribunal confirmed this decision, finding that despite disputes over certain compliance issues, there was substantial evidence of ongoing breaches.

Civil and Administrative Tribunal [NAME]: [COMPANY] ([NAME]) v Secretary, Department of Education [2020] NSWCATAD 99 Hearing dates: 11 February 2020 Date of orders: 08 April 2020 Decision date: 08 April 2020 Jurisdiction: Administrative and Equal Opportunity Division Before: [NAME], Senior Member Decision: The decision of the Regulatory Authority cancelling the applicant's [NAME] approval is confirmed. Catchwords: ADMINISTRATIVE LAW – review of decision cancelling [NAME] approval – whether conditions of approval breached – whether failed to operate a service for more than 12 months – whether a [NAME] – correct and preferable decision Legislation Cited: A New Tax System (Family Assistance) ([NAME]) Act 1999 (Cth) Children ([COMPANY]) National Law ([NAME]) [COMPANY] National Regulations ([NAME]) Cases Cited: [NAME] v Secretary, Department of Education [2017] NSWCATAD 257 [COMPANY], Department of Education and Training [2019] AATA 3739 [COMPANY] v Department of Education and Training (Review and Regulation) [2019] VCAT 1631 [NAME] v Secretary of the Department of [NAME] [2019] NSWCATAD 45 [COMPANY], Department of Education and Training [2018] AATA 2706 [COMPANY] v Secretary of the Department of [NAME] [2019] NSWCATAD 122 Category: Principal judgment Parties: [COMPANY] ([NAME]) (Applicant) Secretary, Department of Education (Respondent) Representation: Solicitors: [redacted] Crown Solicitor (Respondent) File Number(s): 2019/00347324 Publication restriction: Nil

REASONS FOR DECISION

Background 1. This is an application for review of the decision by the respondent to cancel the applicant's [NAME] approval. The decision was made pursuant to s 31(a) of the Children ([COMPANY]) National Law ([NAME]) ("the National Law") on 3 October 2019.

2. The applicant held a service approval to operate a [NAME] from 10 February 2014 following approval by the respondent to transfer the service approval from "[NAME]" to the applicant. The service was known as "[NAME]".

3. The following facts are not in dispute. On 8 November 2017 the Australian Department of Education and Training issued a Notice of Intention to cancel the applicant's approval under the A New Tax System (Family Assistance) ([NAME]) Act 1999 (Cth) ("the [NAME] Act") (known as a child [NAME] benefit or CCB approval). This followed findings made by the delegate of the Secretary of the Department that the service had not complied and continued not to comply with conditions for its continued approval under the following provisions of the [NAME] Act:

1. Section 196(1) making it a condition that the service satisfies any eligibility rules applying to it under paragraph 205(1)(b);

2. Section 196(2) making it a condition that the service not contravene an obligation imposed on it by the [NAME] Act; and 3. Section 196(3) making it a condition that the operation of and provision of [NAME] by the service comply with all applicable requirements imposed by a law of the Commonwealth or the State or Territory in which it operates.

1. The Department again wrote to the applicant on 7 March 2018 advising that it had received additional information from the [NAME] Department of Education relating to visits made in December 2017, which had allegedly identified a number of discrepancies in the applicant's attendance reports. In particular since the notice of intention to cancel was issued, the applicant had continued to fail to comply with a number of its obligations including reporting attendances for children who were in fact overseas, failing to report attendances within the required timeframe, reporting absences after [NAME] for the child had ceased, and reporting [NAME] providing [NAME] for more than 7 children at one time.

2. The applicant was invited to make further written submissions on these matters no later than 16 March 2018.

3. On 3 April 2018 the Department cancelled the approval of the applicant under the [NAME] Act with effect from 13 April 2018. The effect of this decision was that [NAME] would no longer be able to receive Australian Government child [NAME] fee assistance for [NAME] provided by the applicant.

4. The applicant sought a review of this decision in the Administrative Appeals Tribunal (AAT) but it was affirmed ([COMPANY], Department of Education and Training [2019] AATA 3739).

5. On 4 June 2018 the respondent sent a Compliance Notice to the applicant under s 177 of the National Law requiring it to take steps outlined in the notice to comply with various provisions of the National Law or the [COMPANY] National Regulations ([NAME]) ("the National Regulations") at a number of its family day [NAME] locations and provide written evidence of its compliance by 22 June 2018.

6. The non-compliance issues identified in the Notice included the following: 1. numbers of children, 2. coordinator to [NAME] ratios, 3. [NAME] supervision of children, 4. safe storage of cleaning chemicals and safe premises, 5. working with children checks for persons residing at [NAME]' residences, 6. display of approvals and supervisors on the premises, 7. keeping of prescribed documents available for inspection, 8. health and hygiene practices, 9. first aid kits, 10. emergency and evacuation procedures, 11. risk assessments and written authorisations for excursions, 12. assessments including risk assessments of each residence and/or venue for day [NAME], 13. safety of glass accessible to children or 0.75 m or less above floor level, 14. approval of family day [NAME] assistants, 15. attendance records, and 16. systems for ensuring that supervisors, staff members and [NAME] follow the policies and procedures required under Regulation 168 and 169.

1. I note that the applicant disputes that there was non-compliance with some of these matters.

2. On 22 June, 27 July, 31 August, 21 September, and 26 October 2018 the applicant applied to the respondent to grant voluntary suspension of its service approval. On each occasion the application was refused.

3. On 27 July 2019 the respondent issued a Show Cause Notice to the applicant giving notice that it intended to cancel its [NAME] approval on the following grounds:

1. It was satisfied that the applicant was not a [NAME] to be involved in the provision of an [NAME];

2. The approved [NAME] had breached a condition of the [NAME] approval, namely regulations 124 and 177(2).

1. On 16 August 2019 the applicant provided a written response.

2. On 3 October 2019 the approval was cancelled.

Relevant legislation

The National Law 1. A [NAME] is an "[NAME]" that is "delivered through the use of 2 or more [NAME]" and which "operates from 2 or more residences" (s 5(1) of the National Law).

2. A person must have been granted [NAME] approval and service approval under the National Law in order to operate a [NAME]. The respondent is the regulatory authority with the power to grant, suspend and cancel such approvals.

3. The objectives and guiding principles are contained in s 3 of the National Law and an entity with functions under the National Law is to exercise its functions having regard to the objectives and guiding principles of the national [COMPANY] framework (s 4). 3 Objectives and guiding principles (1) The objective of this Law is to establish a national [COMPANY] quality framework for the delivery of [COMPANY] to children. (2) The objectives of the national [COMPANY] quality framework are— (a) to ensure the safety, health and wellbeing of children attending [COMPANY]; (b) to improve the educational and developmental outcomes for children attending [COMPANY]; (c) to promote continuous improvement in the provision of quality [COMPANY]; (d) to establish a system of national integration and shared responsibility between participating jurisdictions and the Commonwealth in the [NAME] of the national [COMPANY] quality framework; (e) to improve public knowledge, and access to information, about the quality of [COMPANY]; (f) to reduce the regulatory and administrative burden for [COMPANY] by enabling information to be shared between participating jurisdictions and the Commonwealth. (3) The guiding principles of the national [COMPANY] quality framework are as follows— (a) that the rights and best interests of the child are paramount; (b) that children are successful, competent and capable learners; (c) that the principles of equity, inclusion and diversity underlie this Law; (d) that Australia's Aboriginal and Torres Strait Islander cultures are valued; (e) that the role of parents and [NAME] is respected and supported; (f) that best practice is expected in the provision of [COMPANY].

1. Section 12 provides: 12 Applicant must be [NAME] (1) An applicant who is an individual must satisfy the Regulatory Authority that the applicant is a [NAME] to be involved in the provision of an [NAME]. (2) If the applicant is not an individual, the applicant must satisfy the Regulatory Authority that— (a) each person who will be a person with management or control of an [NAME] to be operated by the applicant is a [NAME] to be involved in the provision of an [NAME]; and (b) the applicant is a [NAME] to be involved in the provision of an [NAME]. (3) The head of a government department administering an education law of a participating jurisdiction is taken to be a [NAME] for the purposes of this Part.

1. Section 18 provides that a [NAME] approval authorises the approved [NAME] to operate an approved [NAME] and an associated children's service, if the approved [NAME] also holds the service approval for those services.

2. Section 31 sets out the grounds on which a [NAME] approval may be cancelled: 31 Grounds for cancellation of [NAME] approval The Regulatory Authority may cancel a [NAME] approval if— (a) the Regulatory Authority is satisfied that the approved [NAME] or a person with management or control of an [NAME] operated by the approved [NAME] is not a [NAME] to be involved in the provision of an [NAME]; or (b) the Regulatory Authority is satisfied that the continued provision of [COMPANY] by the approved [NAME] would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by an [NAME] operated by the approved [NAME]; or (c) the approved [NAME] has been found guilty of an indictable offence or an offence that if committed in this jurisdiction would be an indictable offence; or (d) the approved [NAME] has been found guilty of an offence under this Law as applying in any participating jurisdiction; or (e) the approved [NAME] has breached a condition of the [NAME] approval; or (f) the approved [NAME] has not operated any [NAME] for a period of more than 12 months (including any period of suspension).

1. Section 13 provides the matters to be taken into account in assessing fitness and propriety: 13 Matters to be taken into account in assessing whether [NAME] (1) In determining whether a person is a [NAME] under this Division, the Regulatory Authority must have regard to— (a) the person's history of compliance with— (i) this Law as applying in any participating jurisdiction; and (ii) a former [COMPANY] law of a participating jurisdiction; and (iii) a children's services law of a participating jurisdiction; and (iv) an education law of a participating jurisdiction; and Note. If a person has been served with an infringement notice for an offence under this Law, and the person has paid the penalty, the Regulatory Authority cannot consider that conduct when determining whether the person is fit and [NAME]. See section 291(5). (b) any decision under a former [COMPANY] law, a children's services law or an education law of a participating jurisdiction to refuse, refuse to renew, suspend or cancel a licence, approval, registration or certification or other authorisation granted to the person under that law; and (c) either— (i) any prescribed matters relating to the criminal history of the person to the extent that history may affect the person's suitability for the role of [NAME] of an [NAME]; or (ii) any check of the person under a working with vulnerable people law of a participating jurisdiction; and (d) whether the person is bankrupt, or has applied to take the benefit of any law for the relief of bankrupt or insolvent debtors or, in the case of a [NAME], is insolvent under [NAME] or an externally-administered [NAME]. (2) Without limiting subsection (1), the Regulatory Authority may have regard to— (a) whether the person has a medical condition that may cause the person to be incapable of being responsible for providing an [NAME] in accordance with this Law; and (b) whether the financial circumstances of the person may significantly limit the person's capacity to meet the person's obligations in providing an [NAME] in accordance with this Law; and. (c) whether the person has the management capability to operate an [NAME] in accordance with this Law; and (d) any of the following actions taken under the A New Tax System (Family Assistance) ([NAME]) Act 1999 of the Commonwealth in relation to a child [NAME] service approved under that Act, operated by the person or in relation to which the person was a person with management or control— (i) any sanction imposed under section 200 of that Act; (ii) any suspension imposed under section 201A of that Act; (iii) any infringement notice given under section 219TSI of that Act. (3) Nothing in subsection (1) or (2) limits the circumstances in which a person may be considered not to be a [NAME] to be involved in the provision of an [NAME].

1. Section 33 provides the power to cancel a [NAME] approval after considering the [NAME]'s response to a show cause notice. Section 34 provides that if a [NAME] approval is cancelled under s 33, all service approvals held by the person who was the approved [NAME] are also cancelled.

2. Sections 192 and 193 deals with review of a decision to cancel such an approval. 192 Reviewable decision—external review A reviewable decision for external review is— (a) a decision of the Regulatory Authority made under section 191 (other than a decision in relation to the issue of a compliance direction or a compliance notice); or (b) a decision of the Regulatory Authority under this Law as applying in any participating jurisdiction— (i) to suspend a [NAME] approval under section 27; or (ii) to cancel a [NAME] approval under section 33; or (iii) to suspend a service approval under section 72; or (iv) to cancel a service approval under section 79 or 307; or (v) (Repealed) (vi) to direct the approved [NAME] of a [NAME] to suspend the [NAME] and education of children by a [NAME]; or (vii) to give a prohibition notice or to refuse to cancel a prohibition notice. 193 Application for review of decision of the Regulatory Authority (1) A person who is the subject of a reviewable decision for external review may apply to the relevant tribunal or court for a review of the decision. (2) An application must be made within 30 days after the day on which the applicant is notified of the decision that is to be reviewed. (3) After hearing the matter, the relevant tribunal or court may— (a) confirm the decision of the Regulatory Authority; or (b) amend the decision of the Regulatory Authority; or (c) substitute another decision for the decision of the Regulatory Authority. (4) In determining any application under this section, the relevant tribunal or court may have regard to any decision under this Law as applying in another participating jurisdiction of a relevant tribunal or court of that jurisdiction.

The National Regulations 1. The following regulations are relevant in these proceedings. 124 Number of children who can be educated and cared for—[NAME] (1) A [NAME] must not educate and [NAME] for more than 7 children at a family day [NAME] residence or approved family day [NAME] venue at any one time. (2) In determining the number of children who can be educated and cared for by a [NAME] for the purposes of subregulation (1)— (a) no more than 4 can be preschool age or under; and (b) if the children are being educated and cared for at a residence, the [NAME]'s own children and any other children at the residence are to be taken into account if— (i) those children are under 13 years of age; and (ii) there is no other adult present and caring for the children. (3) No more than 7 children can be educated and cared for as part of a [NAME] at a family day [NAME] residence or an approved family day [NAME] venue at any one time. (4) Subregulation (3) does not apply to children visiting a family day [NAME] residence or an approved family day [NAME] venue as part of an excursion. Note. A visiting [NAME] must do a risk assessment for the excursion under regulation 100. (5) Despite subregulations (1) to (4), the approved [NAME] of a [NAME] may approve, in writing, a [NAME] to educate and [NAME] for more than 7 children, or more than 4 children who are preschool age or under, at any one time, in exceptional circumstances. (6) For the purposes of subregulation (5), exceptional circumstances exist if— (a) all the children being educated and cared for by the [NAME] are siblings in the same family; or (b) a child to be educated and cared for is determined to be in need of protection under a child protection law and the [NAME] is determined to be the best person to educate and [NAME] for the child; or (c) the family day [NAME] residence or approved family day [NAME] venue is in a rural or remote area and no alternative [NAME] is available. 158 Children's attendance record to be kept by approved [NAME] (1) The approved [NAME] of an [NAME] must ensure that a record of attendance is kept for the service that— (a) records the full name of each child attending the service; and (b) records the date and time each child arrives and departs; and (c) is signed by one of the following persons at the time that the child arrives and departs— (i) the person who delivers the child to the [NAME] premises or collects the child from the [NAME] premises; (ii) a [NAME] supervisor or an [NAME]. (2) A preschool program provided by a school is not required to comply with subregulation (1) if it keeps attendance records in accordance with the education law, or Government education department policy, of the participating jurisdiction. 177 Prescribed enrolment and other documents to be kept by approved [NAME] (1) For the purposes of section 175(1) of the Law, the following documents are prescribed in relation to each [NAME] operated by the approved [NAME]— (a) the documentation of child assessments or evaluations for delivery of the educational program as set out in regulation 74; (b) an incident, injury, trauma and illness record as set out in regulation 87; (c) a medication record as set out in regulation 92; (d) a record of assessments of family day [NAME] residences and approved family day [NAME] venues conducted under regulation 116; (e) in the case of a centre-based service, a staff record as set out in regulation 145; (f) a record of volunteers and students as set out in regulation 149; (g) the records of the responsible person at the service as set out in regulation 150; (h) in the case of a centre-based service, a record of [NAME] working directly with children as set out in regulation 151; (i) a record of access to early childhood teachers as set out in regulation 152; (j) in the case of a [NAME], a record of staff engaged or employed by the service kept under regulation 154; (k) a children's attendance record as set out in regulation 158; (l) child enrolment records as set out in regulation 160; (m) a record of the service's compliance with the Law as set out in regulation 167; (n) a record of each [NAME] supervisor and any person in day-to-day charge of the [NAME] under section 162 of the Law. (2) The approved [NAME] of the [NAME] must take reasonable steps to ensure the documents referred to in subregulation (1) are accurate. Penalty: $2000. (3) Subject to Subdivision 4, the approved [NAME] of the [NAME] must ensure that— (a) subject to subregulation (4), the documents referred to in subregulation (1) in relation to a child enrolled at the service are made available to a parent of the child on request; (b) the record of compliance referred to in subregulation (1)(m) is able to be accessed on request by any person. Penalty: $2000. (4) If a parent's access to information of the kind in the documents referred to in subregulation (1) is limited by an order of a court, the approved [NAME] must refer to the court order in relation to the release of information concerning the child to that parent. (5) An approved [NAME] of a [NAME] is not required to keep a document set out in subregulation (1) if an equivalent record is kept by a [NAME] under regulation 178."

The issues to be determined 1. The Tribunal must determine what is the correct and preferable decision having regard to the material before it, as held in [NAME] v Secretary, Department of Education [2017] NSWCATAD 257 at [24]-[26]. It is not confined to the material before the original decision maker or the reasons identified in the decision under review ([COMPANY] v Secretary of the Department of [NAME] [2019] NSWCATAD 122 at [28], [41], [87]).

2. The Tribunal may confirm or amend the decision under review, or substitute another decision for the decision under review (s 193 National Law).

3. There is no onus of proof upon either party - [NAME] v Secretary of the Department of [NAME] [2019] NSWCATAD 45 at [32]-[38].

The respondent's case 1. The respondent submits that the applicant's approval should remain cancelled based on the following grounds:

1. The applicant has failed to operate an [NAME] for more than 12 months (s 31(f));

2. The applicant breached a condition of its [NAME] approval by repeatedly failing to comply with the National Law (s 31(e) read with s 19(2)).

3. The applicant is not a [NAME] to operate an [NAME] (s 31(a)).

1. In relation to (1), the respondent submitted that the applicant had stated on a number of occasions to the respondent, the AAT and in these proceedings that it has not operated since April 2018. Therefore it had not been in operation, at the time of the hearing, for just under 22 months.

2. The reason stated for this was that its child [NAME] benefits approval had been cancelled, but the respondent submitted that this did not prevent the applicant from operating. The applicant still does not, however, possess that approval and seems unlikely to operate without it based on its statements to the respondent.

3. With regard to (2), it was submitted that the compliance notice of 4 June 2018 identified a series of wide ranging breaches of the National Law to which the applicant did not reply at the time. In addition, the AAT found that the applicant repeatedly breached the [NAME] Act and the National Law on 5,790 occasions with regard to [NAME] ratios and 1,637 instances of failing to maintain accurate documentation.

4. With regard to (3) the respondent submitted that the Tribunal could take into account the person's history of compliance with the National Law, the person's management capability and any sanction under the previous s 200 of the [NAME] Act, as well as whether its financial circumstances significantly limited its capacity to meet its obligations in providing a service under the National Law (s 13). Where, as here, the applicant is a [NAME], it must satisfy the Regulatory Authority that each person who will have management and control of the service is a [NAME] to be involved in the provision of an [NAME] (s12(2)) ([NAME] at [48]).

5. The respondent submitted that the volume and systemic nature of the breaches by the respondent identified before the AAT, and the sanction imposed under the [NAME] Act, indicates a lack of knowledge of the National Law and ability to implement measures to meet its obligations.

6. It also relied on [COMPANY] v Department of Education and Training (Review and Regulation) [2019] VCAT 1631 in which it was held that cancellation of a [NAME]'s CCB approval pointed against the [NAME] being a [NAME] (at [60]). It submitted that the applicant had shown failure to take responsibility for its deficiencies, had inadequate knowledge, oversight and support and inadequate management capability.

The applicant's case 1. The applicant through one of its directors, [NAME], agreed that there were flaws in its processes but submitted that these were by error and not deliberate. It submitted that conditions should be imposed upon its approval rather than the approval being cancelled. It relied on a position statement responding to the claimed breaches. 2. [NAME] explained that since the AAT decision it could not afford to operate and had lost staff and clients. There were a number of [NAME] hoping that it would be able to operate again. (The evidence was that the applicant could employ 12 [NAME]).

3. The points made by the applicant were:

1. It did not intend to flout the law by failing to provide accurate information to the Department regarding its [NAME]. The software system which it was using failed to provide instructions on how to update change of [NAME] information. The applicant said that due to the lack of information provided by the [NAME], it did not update the changes on the system used by the Department and the Department relied on old information, leading to its officers conducting inspection visits to premises where [NAME] no longer resided. This in turn resulted in the Department making some findings of non-compliance. The applicant said it was not aware that the Department's information had not been updated as its own portal reflected the correct information.

2. It submitted that the majority of inaccurate reports were due to administrative error and staff misinterpreting what was required. It believed that there was no lack of compliance in [NAME] - child ratios in fact.

3. The proportion of Commonwealth child [NAME] subsidies that were received in breach of the [NAME] Act was very small, approximately 0.13% of the total subsidies received. It was acknowledged that the service lacked appropriate governance mechanisms to oversee non-compliance, but it had implemented strategies to deal with this.

4. It disagreed that the service had contravened its reporting obligations with respect to reporting attendance.

5. Some of the matters in the notice had been withdrawn by the Department regarding child ratios and absences.

6. In 2013 when rated and assessed by the Department, the service met two of the seven quality areas and exceeded one of the quality areas. It disputed that it was not able to appropriately supervise or [NAME] for children.

7. The service had taken extensive steps to rectify the identified issues. It was unable to do so immediately because of the "enormity of the data that was identified". The steps taken included:

1. An internal audit;

2. Requesting advice from the Department on how to refund the incorrectly paid subsidies;

3. Developing a compliance strategy to mitigate the risk of non- compliance in submitting attendance records which it submitted "drastically reduced" the instances of error. Furthermore the approval of subsidies for three weeks after the service's cancellation proved that the strategies were effective;

1. As a service working with Culturally and Linguistically Diverse (CALD) communities and staff, the service claimed that there were increased risks of misinterpreting the legislation and regulations and breakdowns in communication. The issues arose from unforeseen circumstances arising from miscommunication; and 2. CALD communities obtained benefits from the service which could understand their unique cultural and linguistic needs. The service had provided bilingual education and [NAME] to the Korean Australian community for over ten years and had brought many benefits for children and parents.

Consideration of grounds

Whether the applicant has failed to operate an [NAME] for more than 12 months 1. It is not disputed that the applicant has not operated an [NAME] for more than 12 months. Moreover the applicant states that it cannot afford to operate unless it is eligible to receive subsidies under the Commonwealth legislation, which currently it is not.

Whether the applicant breached a condition of its [NAME] approval by repeatedly failing to comply with the National Law 1. The breaches relied upon by the respondent are those listed in the notice of 4 June 2018. The applicant did not respond to the 4 June notice at the time. There were several thousands of instances.

2. The applicant does not dispute that it failed to comply with the National Law in some respects but it disputes a few matters, and claims there were explanations or mitigating circumstances for others. The applicant blames the [NAME] for not providing information on how to update the information on the Department's system. I am not satisfied, however, that this failure was responsible for more than a small proportion of the breaches which related to actual operations at the centres.

3. The AAT was satisfied that the applicant had breached multiple conditions for the continued approval of a child [NAME] service under the [NAME] Act and that the breaches were not an isolated event. Those breaches related to failure to provide accurate reports of child [NAME] under s 219N of the [NAME] Act; and contravening s 196(3) of the [NAME] Act by:

1. Instances where the required [NAME] to child ratio was not met;

2. Not registering information regarding relief [NAME];

3. Not accurately keeping attendance records.

1. I note that the applicant does not accept the findings regarding ratios and attendance records. In the AAT decision it is recorded that the applicant blamed clerical errors by the [NAME]. However there is no evidence to support these claims, and in any event it is the [NAME]'s responsibility to meet the conditions. As noted in [COMPANY], Department of Education and Training [2018] AATA 2706 the obligation was on the applicant, not its [NAME]. I do not agree that any language issues which might cause delays or difficulties in ensuring that [NAME] understood instructions given to them by the applicant was unforeseen, as the applicant claims.

2. The applicant submitted that it had implemented measures to address the breaches and showed improvement over three months, but there was no clear evidence of this.

3. Some breaches concerned whether [NAME] responsible for caring for children had [NAME] oversight and instruction, and whether children's whereabouts were known and recorded. These are very significant issues.

4. I am satisfied that the applicant breached a condition of its approval by repeatedly breaching the National Law.

Whether the applicant is a [NAME]

1. On the issue of "fit and [NAME]" the Tribunal said in [NAME] at [54]-[58]: "The context in which the person is or will be engaged in the underlying principles and objects of the legislation give the phrase meaning in particular circumstances: [NAME] (1990) 170 CLR 321 at 380. A definition of fitness and propriety at least includes "honesty, knowledge and ability": [COMPANY] v [NAME] (No 2) (1955) 93 CLR 127 at 156. An assessment of fitness and propriety "also includes public confidence that the person is able to maintain high standards of rectitude and that they likely future conduct will keep to that standard": [NAME] v Secretary of the Department of [NAME] [2017] NSWCATAD 190 at [89]. In the regulatory regime surrounding [NAME] approvals, the term "fit and [NAME]" in context refers to the provision of [COMPANY] to children under 13 years of age. An applicant's fitness and propriety may well be dependent then on an adequate knowledge and understanding of the responsibilities of an approved [NAME], whether the applicant acts in accordance with those responsibilities and whether the applicant has sufficient moral integrity and character to be entrusted with the provision of [COMPANY]: [NAME] v Secretary, Department of Education [2018] NSWCATAD 197 at [31]; [NAME] v Commissioner of Police [2015] NSWCATAD 204 at [91]-[92]. Compliance with the National Law is a mandatory consideration in the assessment of the applicant's fitness and propriety because of the conditions attached to [NAME] approvals. A person's management capability to operate an efficient [NAME] in accordance with the National Law is a relevant consideration in assessing whether a person is a [NAME] to be engaged in [COMPANY]. The objectives of the National Law are promoted where persons with management or control of an [NAME] have knowledge and understanding of the National Law and Regulations: CYU V Secretary Department of Education [2017] NSWCATAD 290 at [53]-[54]; [NAME] v Secretary Department of Education [2018] NSWCATAD 257 at [40], [42]-[43]."

1. Section 13(1) of the National Law also provides that in determining whether a person is a [NAME] I must have regard to the applicant's history of compliance with the National Law. I would normally interpret this to mean proven non-compliance prior to the incidents relied on in these proceedings. There is no evidence of a history of prior non-compliance.

2. In addition I may have regard to: 1. whether the financial circumstances of the applicant may significantly limit the person's capacity to meet their obligations in providing an [NAME] in accordance with the National Law; 2. whether the applicant has the management capability to operate an [NAME] in accordance with the Law; and 3. any sanction imposed under s 200 of the [NAME] Act (s 13(2)).

1. The applicant's decision not to operate for the past 22 months and the applicant's statement that it needed child [NAME] benefit subsidies to operate indicate that its current financial circumstances would not allow it to meet its obligations in providing an [NAME] in accordance with the National Law.

2. As to the applicant's management capability, there are factors which indicate that this capability is weak, such as:

1. The quantity and repeated nature of the matters identified in the 4 June notice, acknowledged by the applicant;

2. The fact that many go beyond administrative errors and relate to matters of safety;

3. The steps taken to remediate the identified issues included an audit and governance measures. However most of these governance measures involved checking for errors in attendance record keeping and did not address the other substantive identified risks. There was no evidence available as to whether the measures are effective. Given the large numbers of breaches, such evidence is necessary if the Tribunal is to have confidence that the applicant is a [NAME] to operate the service.

1. I have also had regard to the sanction of cancellation imposed under the [NAME] Act and which was upheld by the AAT. This sanction was imposed because of the large scale of the breaches and failure to properly educate and supervise staff, in the context of a service involved in caring for children. 2. [NAME], a director of the applicant, clearly desires to assist the [NAME] and there was evidence of her good character and diligence. The evidence, however, supports a finding that the applicant's knowledge and understanding of the responsibilities of an approved [NAME] is inadequate and the applicant has not acted in accordance with those responsibilities.

3. While there is no evidence to suggest that [NAME] individually is not of good character, the available evidence indicates that she and the applicant lack the knowledge and ability to operate the service in compliance with the National Law and therefore are not fit and [NAME] within the meaning of the National Law.

Whether cancellation is the correct and preferable decision 1. The applicant suggested that conditions would be a more appropriate sanction than cancellation. Given the history of the matter, I am not satisfied that conditions would be effective. In addition, in my view any conditions would require extensive oversight and would be unduly onerous for the respondent to monitor.

2. I am also mindful of the objective of the national [COMPANY] quality framework under the National Law to ensure the safety, health and wellbeing of children attending [COMPANY] and the guiding principle that the rights and interests of children are paramount.

3. Given my findings, I am satisfied that the correct and preferable decision is to confirm the Regulatory Authority's decision to cancel the approval.

Order 1. The decision of the Regulatory Authority cancelling the applicant's [NAME] approval is confirmed.

********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of [NAME]. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 April 2020