In the South Australian District Court case of Happy Haven OSHC Pty Ltd v Education and Early Childhood Services Registration and Standards Board of South Australia, the appellant, Happy Haven OSHC Pty Ltd, appealed the decision of the respondent (the Board) to impose conditions on its provider approval. The respondent had concerns in relation to the performance of the appellant in its operation of its services and issued a show cause notice to the appellant in which it set out the further conditions that it proposed to impose on the provider approval of the appellant. The appellant contested the adequacy of that notice and made submissions that the conditions should not be imposed. A delegate of the respondent made a decision to impose the proposed conditions (with one exception). That decision was a reviewable decision for internal review pursuant to section 190, National Law. The appellant instituted that review. The internal review committee of the respondent confirmed the decision to impose the further conditions. The decision of the internal review committee is a reviewable decision for external review pursuant to section 192, National Law. The appellant instituted an appeal to the District Court against the decision of the internal review committee. The appellant contended that the decision should be rescinded, set aside, or remitted because: (1) it was denied procedural fairness; (2) the decision to impose the further conditions was disproportionate; (3) the decision to impose the further conditions was legally unreasonable; and (4) the internal review committee failed to have regard to a relevant consideration.
The Court dismissed the appeal (which was on administrative law grounds). In relation to the disproportionality ground (which the court considered within the third ground of appeal), the Court stated (paras.87-91):
The appellant characterised the decisions as the respondent being dissatisfied with the administration and paperwork of the appellant. That is not the basis for the Original Decision or the decision of the internal review committee. The Original Decision states that the conditions were imposed because of the potential of significant harm by the systemic risks to the children’s health, safety and wellbeing because of the number of incidents and substantiated breaches. The Original Decision sets out the reasons for this conclusion (which are set out in paragraph 12 above), only one of which might be described as administrative in character being the application of waiver and new service approvals or amendments. When read as a whole, the reason for the imposition of the conditions was the history of breaches and non-compliance that led to the potential or risk of harm to the safety and wellbeing of children and the failure of the appellant to address those breaches and risk. The decision of the internal review committee also emphasised that the committee was satisfied that correct course of compliance action (i.e. the imposition of conditions) was taken in response to systemic regulatory compliance issues that posed a high risk to the safety, health and wellbeing of the children in the care of the appellant.
The conditions requiring the engagement of an independent consultant, the conducting of a quality and compliance review of the appellant’s systems, policies, practices and the preparation of a written plan identifying a list of target areas for improvement and actions to be undertaken and monthly reporting to the respondent against the plan are directly related to the concerns that the respondent had expressed about the systemic non-compliance by the appellant. Those conditions are all directed at improving the performance of the appellant. They are directed to ensuring the objectives of the National Law, including in particular, the safety, health and well-being of the children. The decision-maker could have reasonably come to the conclusion that the conditions would have assisted in ensuring the objectives of the National Law were achieved and were necessary for that purpose.
The first two conditions relate to the limiting of childcare services to 58 (or if a service is cancelled, to the number of services remaining after that cancellation) for a period of 12 months commencing 27 June 2023. As at 27 June 2023, the appellant was operating 58 childcare services. The appellant submitted that these conditions had no rational connection to the concerns held by the respondent as to the safety and well-being of children in the care of the appellant.
The conditions were premised on the appellant’s compliance and systems not being adequate to deal with the demands of operating 58 services. There had been substantiated breaches of the National Law including substantiated breaches of failing to protect children from harm and hazard. Therefore, it was reasoned that the temporary freeze on the number of services for 12 months (when coupled with the conditions regarding the engagement of the consultant and the preparation of plans to address deficiencies) would ensure that the appellant concentrated on and gave priority to compliance issues rather than expansion issues. Given the paramount objective under the National Law being the safety and wellbeing of the children, it is reasonable for the decision-maker to give impose a condition that will assist in ensuring that objective is met. The conditions place a temporary freeze and thus were not excessive. This is particularly the case when the chief executive officer of the appellant was also the nominated supervisor under s 161 of the National Law.
The decision-maker could have reasonably come to the conclusion that the first two conditions would have assisted in ensuring the objectives of the National Law were achieved and were necessary for that purpose. The conditions were a proportionate response to the concerns that the respondent had identified. They did not interfere with the existing operations of the appellant. They operated only for a limited period.
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