In Famous Kids Family Day Care Pty Ltd v Secretary, Department of Education, the NSW Civil and Administrative Tribunal heard a review of the decision of the NSW Department of Education (the Regulatory Authority under the National Law in NSW) to cancel provider approval of Famous Kids Family Day Care Pty Ltd (applicant). A number of issues were considered by the Tribunal including: whether the applicant and its director were fit and proper persons to be involved in the provision of an education and care service, whether the applicant has breached a condition of the provider approval, and whether the cancellation decision should be confirmed as a matter of discretion. The Tribunal found that Ms Manassah nor Famous Kids were a fit and proper persons to be involved in the provision of an education and care service. They also found that Famous Kids breached a condition of its provider approval, being the condition requiring it to comply with the National Law. The Tribunal therefore held that cancellation was the correct and preferable decision, and accordingly confirmed the Secretary’s decision to cancel the applicant's provider approval. It should be noted that cancellation of provider approval followed a extensive number and range of non compliances with the National Law and Regulations and issuing of compliance notices and direction.
The Tribunal's comments in relation fitness and propriety under s.13, National Law is particularly interesting (paras.71-78, 99):
Matters to be taken into account when determining whether Ms Manassah is a fit and proper person include the matters set out in s 13 of the National Law, some of which are mandatory considerations and some of which are discretionary. These include Ms Manassah’s history of compliance with the National Law, whether she has a working with children check clearance (both mandatory considerations), and whether she has the management capability to operate an education and care service in accordance with the National Law (a discretionary consideration). The Tribunal’s consideration of Ms Manassah’s fitness and propriety is not limited to consideration of the matters identified in s 13; it may also consider other relevant matters (see s 13(3)). As Famous Kids has acknowledged, a person’s knowledge and understanding of the National Law and the National Regulations is relevant to the person’s fitness and propriety to be involved in the provision of an education and care service.
The concept of “fitness” has three components, honesty, knowledge and ability (Hughes & Vale Pty Ltd v New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 at 156-157; Tanyous v Secretary, Department of Education [2018] NSWCATAD 197 at [31]). The expression “fit and proper person” takes its meaning from its context, from the activities in which the person is or will be engaged, and the ends to be served by those activities (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380).
It is important to note that the matters in s 13 are to be taken into account in determining whether a person is a fit and proper person under Division 1 of Part 2 of the National Law (National Law, s 13(1), our emphasis). That is, those matters are to be taken into account when determining whether an applicant for a provider approval, and any person with management or control of an education and care service to be operated by an applicant who is not an individual, is a fit and proper person to be involved in the provision of an education and care service.
Each of those persons has a significant role in providing, operating or managing a service. An approved provider may only apply for a service approval if it will be the operator of the service or responsible for managing staff members and nominated supervisors of that service (National Law, s 43(2)). A person with management or control of an education and care service is, by definition, a person who is responsible for managing the delivery of the service (National Law, s 5).
As the Secretary submitted, the National Law and National Regulations make detailed prescription in respect of matters relevant to the establishment and operation of a day care service and it is a condition of a provider approval that an approved provider must comply with both (s 19(2)). An approved provider has a particular responsibility in this regard as family day care services are operated pursuant to a co-regulatory model, in which approved providers are responsible for regulating, in a supervisory sense, the educators they engage (Kids Belong Family Daycare Pty Ltd v Department of Education [2021] NSWCATAD 112 at [18]).
That context is significant when assessing whether a person is a fit and proper person to be involved in the provision of an education and care service under s 12 of the National Law. The circumstance that the Regulatory Authority is entitled to consider “whether the person has the management capability to operate an education and care service in accordance with this Law” indicates that the legislature intended a person’s fitness and propriety to be considered in the context of the application for a provider approval. The test of whether “the applicant is a fit and proper person to be involved in the provision of an education and care service” (National Law, s 12(1)) is to be approached in the context where that involvement is to be as an approved provider or manager. The word “provision” picks up the word “provider” in “provider approval” and, we consider, refers to the operation or management of the service and offering the service to others.
The words “the provision” are used in a different sense here than they are in s 182, which provides that the Regulatory Authority may give a prohibition notice to a person who is in any way involved in the provision of an approved education and care service if it considers that there may be an unacceptable risk of harm to a child or children (National Law, s 182(1), our emphasis). The legislature expressly gave an expanded meaning to the words “a person involved in the provision of an approved education and care service” for the purpose of that section to include employees, educators and volunteers (National Law, s 182(2)). We consider that the word “provision” is used in a more restrictive sense in s 12(1), which focuses upon the person’s fitness and propriety to provide and/or operate an approved education and care service as an approved provider or manager.
Famous Kids accepted that a person’s knowledge and understanding of the National Law and the obligations it imposes on an approved provider are relevant to an assessment of whether a person is a fit and proper person to be involved in the provision of an education and care service. However, it said that whether a person was fit and proper involved a value judgment...
We accept the Secretary’s submission that Famous Kids’ history of non-compliance with the National Law and National Regulations, which is dealt with in more detail below, has arisen at least in part as a result of Ms Manassah’s inadequate knowledge and understanding of her role as a person with management or control of the service. She is the person principally responsible for ensuring that Famous Kids complies with its obligations. Ms Manassah has failed to ensure that Famous Kids is compliant and has often demonstrated a lack of appreciation of the importance of the role of Famous Kids in effectively supervising educators and of its compliance with record-keeping and other requirements.
In relation to the fitness and propriety of Famous Kids itself, the Tribunal observed (paras.126-9, 258-265, 272-4):
A mandatory consideration when determining whether a person is fit and proper is the person’s history of compliance with the National Law, by operation of s 13(1)(a) of the National Law. The “proper construction of s 13(1)(a) is that it requires the decision-maker to take into account the history of a person’s compliance with the National Law both as determined by a court and as demonstrated on the evidence before the Secretary or, on review, before the Tribunal” (Secretary, Department of Education v Early Childhood Education Australia Pty Ltd [2021] NSWCATAP 397 at [91]).
The Secretary relied primarily on the contraventions of the National Law and National Regulations which were identified in the November 2020 visits in terms of Famous Kids’ history of non-compliance. However, the Secretary also relied upon earlier non-compliances and what she said was a pattern of non-compliance.
Famous Kids submitted that the words “history of compliance” in s 13(1) of the National Law referred to non-compliances prior to the instances giving rise to these proceedings (relying upon Jessica Education Centre Pty Ltd v Secretary, Department of Education [2020] NSWCATAD 99 at [47]). This construction is not supported by the approach taken by the Appeal Panel in Secretary, Department of Education v Early Childhood Education Australia Pty Ltd [2021] NSWCATAP 397 (see especially at [93]). Nor do those words, on their ordinary meaning, necessarily exclude recent compliance history; they are apt to include a person’s whole history of compliance. There is no reason we can see why the legislature would have chosen to exclude recent compliance (or lack thereof) from an assessment of fitness and propriety. If we are wrong about this, however, we consider that a person’s recent compliance with the National Law is still a matter we can take into account in our discretion (see National Law, s 13(3)).
When considering Famous Kids’ level of compliance in 2020, we have taken into account the impact of the COVID-19 pandemic. This was not, however, a factor upon which counsel for Famous Kids placed a lot of emphasis. Furthermore, the history of compliance by Famous Kids with the National Law and National Regulations indicates a pattern of non-compliance which precedes the pandemic...
Famous Kids’ history of compliance with the National Law, as set out above, is indicative of a lack of fitness and propriety to be involved in the provision of an education and care service.
As is apparent from our reasons above, there are many instances where the regulator has identified breaches on the part of Famous Kids, and the breaches have later been repeated. This is generally a result of Famous Kids failing to take appropriate action to ensure that the breaches did not recur, and failing to be proactive in ensuring compliance with the National Law.
To reiterate, Famous Kids failed to comply with its obligation to advise educators of their obligations under child protection law in 2014 and 2017. Several educators and a coordinator were unaware of those obligations in 2020. Our view is that Famous Kids had not complied with that obligation before September 2020 and the evidence that it was compliant in November 2020 is weak. Even if it was compliant with its child protection obligations in November 2020 (and we have not found that it was not compliant at that time), it failed to ensure that educators understood their child protection obligations. This put children at risk or, at the very least, constituted a failure to ensure the safety, health and wellbeing of children attending the services.
Famous Kids breached regulation 116 in 2016 by not assessing educators’ residences at least annually. It was again in breach of regulation 116 in November 2020. Its claims that all educators were visited monthly were not supported by the documentary evidence. It is plain that Famous Kids could have taken reasonable steps, which it did not take, to ensure compliance with regulation 116.
Compliance with regulation 116 is important as it is designed to address any risks to children’s health and safety at each educator’s residence. The approved provider is required to consider matters such as the existence of any water hazards and the risk posed by animals at the residence. Failure to comply with regulation 116 potentially puts children’s safety, health and wellbeing at risk.
Famous Kids failed to comply with the requirement in regulation 153 to keep a register containing prescribed information about educators in July 2014, October 2014 and November 2020. The purpose of this register is to keep a record of important information about educators, including about their first aid training and working with children checks, which provides a means for both the approved provider and the Secretary to monitor and check compliance. The failure to keep a register which complied with regulation 153 was unexplained. Given that Famous Kids was alerted to its non-compliance with this regulation in 2014, the continued failure to comply in 2020 was even more serious. It is consistent with a lax attitude towards compliance. Famous Kids also failed to comply with the requirements concerning risk assessments and authorisations for excursions in 2016, 2017 and 2020. The breaches in 2020 were significant, with a large number of educators found to be transporting children to and from school and on excursions without having conducted the required risk assessments and without having obtained the relevant authorisations from parents. Many educators were unaware of their obligations in this respect. Those failures reflect a lack of supervision and support of educators on the part of Famous Kids. As Ms Manassah acknowledged, she could have done more “to do proper checks complaint [sic] with the National Law and Regulations.” There is little evidence to indicate that Famous Kids had taken steps to ensure compliance in this area, notwithstanding the findings of non-compliance in 2016 and 2017.
Famous Kids was in breach of section 167 of the National Law and/or regulation 103 of the National Regulations in respect of physical hazards and lack of safety at educators’ homes on 15 August 2014, 17 and 18 January 2017 and 24 October 2017. A large number of breaches of those provisions was identified in the November 2020 assessment visits, as well as breaches of regulation 117. The extent of the breaches was, in our view, due to Famous Kids’ failure to adequately inspect, supervise and support its educators and to put in place adequate systems to proactively ensure compliance with the National Law and National Regulations....
The failure of Ms Manassah and Famous Kids to take all reasonable steps to ensure compliance with the National Law, in circumstances where they have undertaken to take those steps, is indicative of a lack of recognition of the importance of compliance with the National Law. It constitutes a failure to acknowledge and give effect to the guiding principle that best practice is expected in the provision of education and care services (National Law, s 3(3)(f)).
We have also taken into account the incident in 2017 when Famous Kids provided misleading information to the Secretary about the number of educators it had registered. For the reasons given in relation to Ms Manassah, this is indicative of a lack of fitness and propriety on the part of Famous Kids to be involved in the provision of an education and care service. It is also part of the history of non-compliance by Famous Kids, constituting a failure to comply with section 295 of the National Law.
We consider that the history of compliance by Famous Kids with the National Law strongly indicates that it is not a fit and proper person to be involved in the provision of an education and care service.
In relation to whether cancellation was the most appropriate response in the case, the Tribunal stated:
The Secretary’s position is that the Tribunal should confirm the cancellation decision. She formally submitted that the Appeal Panel erred in reaching the conclusion that the Tribunal is empowered to impose or amend the conditions of a provider approval in Secretary, Department of Education v Early Childhood Education Australia Pty Ltd [2021] NSWCATAP 397 at [99], but in any event opposed the imposition of conditions.
Famous Kids contended that the correct and preferable decision was for the Tribunal to impose conditions upon its provider approval. It submitted that permitting a business which has taken active steps to improve its operations and expressed a willingness to work with the regulator to further improve any concern about its operations would not undermine the National Law’s objective of promoting continuous improvement in the provision of quality education and care services. Rather, it said, the opposite is true. It proposed conditions to address the regulator’s concerns.
Given the conclusions we have reached that Famous Kids and Ms Manassah are not fit and proper persons to be involved in the provision of an education and care service, the correct and preferable decision is to confirm the decision to cancel Famous Kids’ provider approval. The fitness and propriety of the proposed provider and of each person with management or control of a proposed education and care service are matters of which the regulator must be satisfied before granting a provider approval.
Even if we are wrong in our conclusion that Famous Kids and Ms Manassah are not fit and proper persons to be involved in the provision of an education and care service, we nevertheless consider that the correct and preferable decision remains to confirm the cancellation decision [this seems to refer to breach of condition of provider approval in s.19(2)]. That is for a number of reasons:
1. A large number of contraventions have been identified by the regulator over a six year period on many different occasions;
2. Famous Kids has not taken adequate steps to address the non-compliances identified over a number of years, with the result that it has found to be non-compliant with the same or similar provisions on multiple occasions;
3. Famous Kids engaged an external consultant to assist it with compliance in 2017, but failed to fully implement its recommendations, despite its assurances that it would do so;
4. Famous Kids has provided inadequate monitoring and support of its educators over a long period of time;
5. Famous Kids was not transparent with, and positively misled, the regulator in 2017, by informing the regulator that it had far fewer educators than were in fact registered with it, and by failing to alert the regulator to the mass resignation and re-employment of a large number of educators in circumstances where that occurred at the time of a compliance check;
6. Famous Kids has not taken a proactive approach to ensuring compliance with the National Law;
7. Famous Kids has achieved the lowest rating against the National Quality Standards twice, most recently at around the time its provider approval was cancelled, including with respect to the standard that each child is protected;
8. The Tribunal cannot be confident that Ms Manassah would increase her knowledge of the National Law and the National Regulations, provide more oversight of educators and coordinators, or implement the recommendations of the second Vertex report, as she has undertaken to do, in circumstances where she has failed to make good on her assurances in the past.
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