Darlingia Ltd v Non-State Schools Accreditation Board [2024] QCAT 262

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Darlingia Ltd v Non-State Schools Accreditation Board [2024] QCAT 262 PARTIES: DARLINGIA LTD (applicant) v NON-STATE SCHOOLS ACCREDITATION BOARD (respondent) APPLICATION NO/S: GAR370-22 MATTER TYPE: General administrative review matters DELIVERED ON: 26 June 2024 HEARING DATE: 13 March 2024 HEARD AT: Brisbane DECISION OF: Member Bertelsen ORDERS: The application by Darlingia Ltd to set aside the Non-State Schools Accreditation Board’s decision of 15 August 2022 (cancelling Darlingia Ltd accreditation for primary education) is refused. The Non-State Schools Accreditation Board’s decision of 15 August 2022 is affirmed. CATCHWORDS: Primary school education – accreditation of non-state primary school – school’s governing body’s obligation to comply with accreditation criteria – transparency and competency of school’s governing body to comply with accreditation criteria and obligation to ensure financial viability and implementation of Australian Curriculum Education (Accreditation of Non-State Schools) Act 2017 (Qld), s 26, s 71 Education (Accreditation of Non-State Schools) Regulation 2017 (Qld), s 6, s 8, s 9, s 15 APPEARANCES & REPRESENTATION: Applicant: Deborah Schiel-Zaini, governing body member and school principal Respondent: Ms K Slack of Counsel instructed by McCullough Robertson Solicitors -- 1 of 15 -- 2 REASONS FOR DECISION [1] Darlingia Ltd, a company limited by guarantee conducting primary school education as Darlingia Forest School (‘the governing body’/‘Darlingia’/‘the school’), seeks review of the decision of the Non-State Schools Accreditation Board (‘the Board’) constituted under the Education (Accreditation of Non-State Schools) Act 2017 (‘the Accreditation Act’) made 15 August 2022 to cancel the school’s accreditation for primary education pursuant to section 71(3) of the Accreditation Act. Darlingia seeks the setting aside of the cancellation and reconsideration particularly of mandatory audits. Background and evidence [2] Darlingia Ltd a company limited by guarantee was established in 2019. It was registered as a charity the same year. On 23 January 2020 the Board granted accreditation to the school for primary education. After some delay due to change of premises Darlingia Forest School opened on 1 February 2021 at 89 Mourilyan Road Innisfail catering for prep to year four students initially it seems with two enrolled students and four part time staff as “the last hope for these children who struggle to do well at conventional schools”. [3] On 4 August 2021 the Board gave Darlingia’s governing body a notice for two authorised persons Pamela Hall and Christopher Byrne (the authorised persons) to enter the school premises on 1 September 2021 to determine compliance with accreditation criteria and compile a written report. The Board was already in receipt of information and documents provided by Darlingia in response to a prior Board request. [4] The authorised persons at time of entry would request to see additional documents previously requested, facilities and evidence of processes previously provided, agendas and minutes of the governing body’s meetings and a governing body charter including delegation of financial matters. The authorised persons also wished to see a teaching staff list showing evidence of teacher registration and list of qualifications, list of non-teaching staff with record of positive blue cards or exemption notices, class organisation for teachers and resources such as timetables, policy and procedure documents and implementation processes relevant to student protection, work health and safety and students with a disability, improvement processes and evidence of continual evaluation and renewal, written education programmes for all year levels including assessment and reporting methods and finally some samples of student work for current year levels. [5] After entry on 1 September 2021 the authorised persons compiled an exhaustive sixteen-page written report dated 6 September 2021. There were seven assessment categories. [6] Firstly, there was an assessment of the schools governing body. The authorised persons found the governing body had in place appropriate guiding principles and procedures with respect to conflict of interest but there was no evidence of these being applied. The agendas and minutes of the governing body’s board meetings did not address conflicts of interest as a standing item nor reflect any consideration of possible conflicts of interest. Nor did they show evidence of oversight of the school’s finances, insurances, risk management, work health and safety or compliance matters. The authorised persons concluded based on the review of the agendas and minutes of the -- 2 of 15 -- 3 governing body’s board meetings that the governing body’s board did not appear to be exercising appropriate oversight of the school’s operations. [7] Secondly, administration and governance were assessed particularly in the context of enrolment and attendance data. The integrity and security of enrolment and attendance lists was not considered problematic since at the time only two students both being children of the principal were enrolled. However, the complaints handling policy and procedure document did not include any specific reference to procedural fairness, natural justice or managing conflicts of interest. [8] Thirdly, financial viability was assessed. In a letter dated 24 May 2021 the school’s independent accountant was of the opinion that the school was financially viable provided Federal and State funding was available, student enrolments grew as estimated, student fees were collected as budgeted, teacher/student ratios remained as estimated, wages increased within reason and there was a review of actual and forecasted figures for 2021 as well as a forecasted budget for the 2022 year. The business plans were based on enrolments of six and twelve students. However, the business plans only covered the 2021 calendar year with only two students enrolled. With the independent accountant’s report noting enrolment numbers as a key assumption for the school’s financial viability the business plans assumptions for enrolments in 2021 had not been achieved with only two students enrolled. [9] Fourthly, the school’s education programme was addressed. With respect to planning the written education programme, whilst the school’s philosophy and children’s interests were matched to the Australian Curriculum, discussions and observations of school activities did not reflect that planning. There was limited evidence of activities matching the school’s written curriculum and limited evidence of the implementation of the content of the planned learning activities. Whilst students were assessed by reference to the Australian Curriculum no assessment samples were provided. Whilst the school’s statement of philosophy and aims was an eclectic mix manifested in a particular school activities programme it was less evident how such activities linked to the Australian Curriculum. Nor was it clear how those philosophies and aims were enacted at the school. The Alice Springs (Mparntiwe) Education Declaration formed part of the school’s education programme for 2021. It’s declarations and goals promoted equity and excellence as well as for Australians to become confident and creative individuals, successful learners, and active and informed members of the community. The enactment of the goals in written planning or implementation was not evident. [10] Fifthly, student welfare processes were addressed. The school had a work health and safety (WHS) policy. There was no evidence that any WHS training had been provided to employees. There was no identified risk management policy nor any documented risk assessments. [11] Sixthly, school resources were addressed. On the date of entry, it was discerned that staff numbers, particularly teachers, were inadequate. The commercial lease in place for the use of the premises was adequate and Local Authority approved. In house facilities were compliant. [12] Seventhly, improvement processes were addressed. There was no demonstrable systematic approach about improvement processes. Rather material and documentation indicated an intention to improve and gather data for an improvement plan. -- 3 of 15 -- 4 [13] In summary the authorised persons were not satisfied the school was complying with accreditation criteria. [14] On 4 November 2021 the Board issued a show cause notice proposing to cancel the school’s accreditation for primary education. The notice referred to the authorised persons site visit of 1 September 2021 stating that a review of the governing body’s agendas and minutes of meeting found there to be no evidence of oversight of the school’s finances, insurances, risk management, work health and safety or compliance matters. Additionally, there was non-compliance with prescribed criteria for the school’s accreditation about its: (a) administrative and governance arrangements; (b) financial viability; (c) educational programme; (d) student welfare processes; (e) resources; and (f) improvement processes. [15] There was a failure to comply with virtually all accreditation criteria. The notice went on to confirm and elaborate on those shortcomings identified in the 1 September 2021 school visit. [16] The school responded stating it was taking steps to improve practices introducing a standing meeting agenda, producing an organisational structure, updating complaints handling policy and procedure, purchasing and implementing management software, seeking and obtaining a certificate of financial viability from an independent accountancy firm, developing a new business plan, reviewing the school budget, producing a revised educational programme, revising assessment practices, producing further evidence of the statement of philosophy and aims, improved referencing to the needs of students with a disability, developing a risk management policy, introducing workplace health and safety training, completing risk assessments and updating risk management policy, confirming the school’s position that an adequate number of teachers were on hand at time of school visit, confirming legitimate status of teachers and volunteers present at time of school visit and developing an operational continuous improvement plan. In summary, the school’s governing body contended it had given compliance issues top priority and had cooperated with respect to processes and practices. [17] On 20 January 2022 the Board wrote to the schools governing body pointing out that whilst some matters had been properly addressed some had not and that further written representations were required. [18] Firstly, those centred around continuing shortfalls in the content, conduct, transparency, and timing of governing body board meetings. [19] Secondly, evidence of implementation of the school management system assertedly already in use. [20] Thirdly, the adequacy of the principal reporting annually and the necessity for the school’s board charter to include finance reports. -- 4 of 15 -- 5 [21] Fourthly, evidence was required confirming publishing updated complaints policy and procedure. [22] Fifthly, financial viability addressing student enrolments for the 2022 academic year, adequacy of information to determine financial resources and conflict of interest as applied to the principal’s loan to the school’s governing body. [23] Sixthly, review and amendment of the school’s educational programme and unit plans to ensure consistency. [24] Seventhly, evidence of compliance with WHS Qld issues identified consequent on inspection. [25] Eighthly, the school’s strategic continuous improvement plan did not address various domains such as leadership and management, teaching and learning. [26] The school’s newly appointed governing body chairperson Michelle Lovelace responded on 18 February 2022 to the shortcomings identified. [27] Firstly, the school’s board charter had been amended to include finances and the number of meetings per year as well as a conflicts of interest register. [28] Secondly, there was the implementation of a system to manage school attendance. [29] Thirdly, the board charter was updated to reflect the principal’s obligation to report four times per year and the school’s governing body’s responsibility with respect to annual budgets, financial transactions, payment approvals, bookkeeper appointment, financial viability (independent accountants) and capital expenditure. [30] Fourthly, complaints procedure was updated. [31] Fifthly, evidence of enrolments for 2022 academic year as well as an independent qualified person providing confirmation of adequacy of financial resources for ongoing viable operation and evidence of conflicts of interest management were all produced. The governing body’s board level procedure was adapted to manage the principals loan agreement with the school, leading to a formalised meeting standing item “declarations of conflict of interest”. A possibility of up to six enrolments would ensure financial viability. [32] Sixthly, unit plans for various subjects were produced. [33] Seventhly, health and safety. An online incident register and emergency evacuation plan as well as portions of a risk benefit register together with evidence from WHS Qld that all instances of non-compliance had been resolved was produced. [34] Eighthly, the school had made changes to the existing school continuous improvement processes to be reviewed and amended along the way. [35] In conclusion the school’s governing body wanted the Board to consider progress made thus far in responding to the show cause notice noting the school’s governing body was made up of volunteers and the school principal. [36] On 3 March 2022 the Board responded acknowledging what it termed “the school’s attempt to address the Board’s concerns” and stating that it considered the school had not addressed those concerns. Further information was required to determine compliance with accreditation criteria under sections 8, 9 and 15 of the Education (Accreditation of Non-State Schools) Regulation 2017 (‘the Regulation’). -- 5 of 15 -- 6 [37] Section 8, concerning financial viability, states in short form that the school must have access to adequate financial resources for its viable operation. Section 9 states that the school must have a written education programme which primarily must be inclusive and responsive to student needs consistent with the Alice Springs (Mparntwe) Education Declaration. Section 15 states that the school must comply with work health and safety and working with children legislation. [38] Firstly, with respect to the suitability of the school’s governing body, the Board, in view of previous failings of the governing body to act diligently, required further clarification of the adequacy of meeting four times per year. Additionally, the school’s plan for director training did not include professional development (itself including mandatory child protection training to be undertaken on an annual basis). Lastly, a director resignation left the school’s governing body with a minimum number of directors, placing in doubt the skill and experience required as outlined in the school board charter. [39] Secondly, with respect to financial viability, it remained unclear to which loan credit facilities referred. An overpaid funding repayment was not explained nor was “another loan” referred to in meeting minutes. The Board asked was the independent qualified person aware of these matters. [40] Thirdly, with respect to the educational plan, whilst assessments had been addressed in unit plans, no samples had been provided nor did a sample student written report indicate the student’s year level. [41] Fourthly, with respect to health and safety, a copy of the school’s proposed WHS training register was requested as well as confirmation of when lockdowns were scheduled and where they would be recorded. Clarification was also sought as to why inspections of the school site by local council and a building certifier were not undertaken. Updated role descriptions for support workers were not provided. [42] On 1 April 2022 the school responded to the Board’s concerns. [43] Firstly, with respect to suitability of the school’s governing body it said it believed that the “show cause process has genuinely vastly improved our capacity to act diligently and discharge our duties and responsibilities”. The school’s governing body said conflicts of interest were declared at the start of tenure and that it had updated its “strengthening our governance plan” as well as appointing a new director. [44] Secondly, with respect to financial viability, the school’s governing body said the credit facility was the loan agreement with the school principal dated 28 October 2021 as amended 2 December 2021 with repayment date extended to 31 December 2023. Australian Government correspondence clarified that with respect to overpayments of recurrent Federal funding it was standard practice to offset such overpayments from future recurrent funding entitlements. With respect to loans, it was clarified that there were two loans by the school principal to the school. The first loan taken out in 2019 had since been repaid. The only current loan being dated 28 October 2021. The independent qualified person/accountant factored in all these matters in assessing the school’s financial viability. [45] Thirdly, with respect to the educational programme, sample ISQ (Independent Schools Queensland) progression points were utilised to diagnose through formative assessment, plan teaching, assess progress and report to parents. -- 6 of 15 -- 7 [46] Fourthly, with respect to health and safety, the school said the fire and lockdown plan listed dates of fire evacuation and lockdown drills. As for the Board’s initial concerns over the “schools front door opens out onto external stairs at the front of the property posing a safety risk in emergencies” it was suggested there was some confusion about who would inspect the property, particularly the external stairs. The local fire brigade only offered advice on minor safety issues, not whole of premises safety issues. The school was directed to speak to the local council or a building inspector as well as QFES (Queensland Fire and Emergency Services) in Cairns. Both the local council and Cairns QFES were contacted. Cairns QFES responded first and evaluated the premises. There was no contact by council’s building certifier. The school discerned the Cairns QFES was the appropriate authority to determine the fire safety of the premises. An updated school support worker description was provided. [47] On 9 May 2022 the Board gave notice to the school of its intention to have Robyn Kronenberg and Kerry Hands (‘the latter authorised persons’) conduct an assessment to determine the suitability of the school’s governing body, compliance with accreditation criteria and provide a report. On 3 June 2022 the Board gave the school’s governing body a notice of entry for such assessment to occur on 22 and 23 June 2022. The latter authorised persons attended and produced their exhaustive twenty-five-page written report dated 7 July 2022. [48] Findings in the report about interaction with the school’s governing body members indicated they were passionate about the school. They were interested in gaining school governance training through ISQ but had found it difficult to access. There was an observed lack of adherence to requirements around conflict of interest especially with the principal being a governing body member, parent and provider of the school’s seed funding with the school’s board chair commenting that in small regional communities it was hard to avoid conflict of interest. The latter authorised persons assessed that the principal’s loans could reasonably be expected to compromise the independence of the governing body when making financial decisions. Whilst there was no evidence of misappropriation of funds there was a lack of transparency in reporting to the board or as required by the board. The three-member school governing body was small and inexperienced. The conflict of interest arising from the existence of the loans and the way such were handled at board level amounted to non- compliance. [49] With respect to financial viability, whilst a business plan had been developed incorporating a budget for upcoming operations, there was no reporting on current income or expenditure versus the budget. There was only period beginning and end bank statement balances with total debits and credits for the particular period recorded. There was no evidence that the school would know if it could pay its debts as and when they fell due. The school’s business plan did not appear to have any correlation with the actual financial operations at the school. [50] With respect to the education programme, there were improvements to address the requirements of the Australian Curriculum but there was insufficient evidence to show that it was used as a basis for the learning programme and assessing achievement standards. [51] With respect to health and safety, there had been an improvement in processes at the school, but these did not extend to risk management of students on excursions. [52] The report went on to specifically address accreditation criteria. -- 7 of 15 -- 8 [53] It concluded “the governing body does not have appropriate guiding principles and procedures for identifying, declaring, and dealing with any conflict of interest a director of the governing body may have in relation to an aspect of the operation of the school” that is, informality and lack of transparency apropos the principal’s loans to the school. [54] There was a lack of diversity of board members. The school’s board directors had difficulty accessing governance training. The number and lack of diversity of directors as well as the absence of formal management expertise did not give any assurance of diligent governance and oversight of financial arrangements. In particular, there was no clear evidence of, or regular reporting of, the outstanding loan amount from the director/principal showing the amount drawn by the school and the amount repaid by the school nor the loan balance. [55] With respect to financial viability, there was no budget loaded into the Quickbooks accounting system to compare actual operating results against budget forecast for 2022. Nor was the principal aware that funding expectations, in this instance, higher Federal recurrent grants, could be checked against the business plan forecast by using the estimation tool in the Commonwealth’s Schools Hub website. This lack of knowledge of available financial management resource tools which are necessary for prudent financial management in schooling was a viability risk for the school’s governing body. The latter authorised persons could not be assured the school had access to adequate financial resources for future viability as required by section 8(1) of the Regulation. [56] With respect to the school’s educational programme, it was recorded that the school was generally compliant but that there was noncompliance relating to the implementation of the Australian Curriculum. Whilst the Australian Curriculum formed the basis for the education programme there was insufficient evidence to show that it was being implemented. [57] With respect to student welfare, there was evidence that the school had undertaken several work health and safety practices. However, there were no risk management assessments available for weekly school excursions. Rather any risk assessment was based on previous experience and knowledge around types of activities. The latter authorised persons found there to be a lack of risk management plans for school activities, excursions and events. [58] With respect to improvement processes, the latter authorised persons found that although the school was in the process of developing a school improvement plan, they deemed such to be noncompliant because the plan was neither complete nor had it been implemented. [59] On 15 August 2022 the Board gave notice pursuant to section 71 of the Accreditation Act of cancellation of Darlingia’s accreditation for primary education for the following reasons: (a) The governing body is not suitable to continue being the governing body of the school; and (b) The school is not complying with the accreditation criteria for primary education. -- 8 of 15 -- 9 [60] With respect to the first reason, the Board reiterated the report findings/conclusions regarding the governing body’s conflict of interest and how that was managed and would be managed. There was a lack of diligent governance and oversight of financial arrangements at the school. The situation was exacerbated by the governing body’s lack of formal governance training. In making its decision the Board relied on section 26(2) of the accreditation act whereby the Board “may have regard to the conduct of the governing body, or its directors, in relation to the operation of the school. [61] Regarding the second reason, the Board accepted the noncompliance with several criteria as set out in the latter authorised persons report of 7 July 2022, the cumulative effect of which was an overall noncompliance. [62] Since filing the review application on 8 September 2022, the school has made several submissions to the Board about the governing body’s suitability and noncompliance with various criteria with financial viability being a major point of concern. A letter from the school to the Board dated 5 December 2023 enclosed the school’s financial statement for the period ending 5 December 2023 which recorded total assets at $113,370.02 and net income at negative $27,435.69. Also enclosed was the school’s budget for 2024. [63] Consideration was given to submissions about financial viability culminating in authorised person Kerry Hands forming the view in March 2024 that she could not confirm the school was able to pay its debts as and when they fell due, nor could she confirm the school’s continued financial viability. In forming her view Ms Hands considered the then currently available information that the school was unable to move to new premises for 2024, student enrolment of sixteen students not eighteen as projected, revised/varied Federal funding, asset deficiency, high borrowing levels compared to net assets and finally Australian Taxation Office debt. [64] At around the same time or shortly prior the Board stated it no longer held the view that the school was not complying with the accreditation criterion relating to governance contained in section 6 of the Regulation (the governing body’s obligation to have a document that outlines the organisational structure for the governance of the school) but continued to contend that the education programme was noncompliant because there remained insufficient evidence to show the Australian Curriculum was being implemented. However, based on the school’s submissions and the changes it had made, the Board was no longer of the view that the school was not complying with accreditation criteria relating to health and safety as well as improvement processes. [65] In reply the school said in view of the Board’s statement about section 6 compliance, the school’s governing body was suitable to continue. It was asserted the school was financially viable and continued to be so. The school was teaching, assessing, and reporting on student achievement using the content and achievement standards in the Australian Curriculum. It was asserted as a matter of human right that the children (students) be given the right to be heard in the current proceeding. The school produced to the Tribunal it’s forecasted budgets for 20221, 20232 and 20243. 1 Hearing Book, 70-71. 2 Hearing Book, 72-73 3 Annexure to the school’s letter to the Board dated 5 December 2023 - Tribunal Exhibit 2 -- 9 of 15 -- 10 AT HEARING [66] By the time of hearing the three contentious issues warranting cancellation that remained outstanding were the school’s governing body suitability, financial viability, and the education programme compliance. [67] In evidence Ms Schiel Zaini, school principal and governing body member, stated the school’s “accountant says we are financially viable… I don’t understand what the problem is here… I don’t understand why those statements have not been accepted”. She stated the education programme had been implemented in that it was being taught, assessed, and reported. In cross-examination she agreed that between an accountant’s letter and an audited financial statement, the latter was the one that was relevant. However, she said “we have a long-term view, next year growing”. [68] Ms Schiel Zaini was referred to the school’s forecasted budget for 2022 which recorded government funding at $214,776.00 and the school’s hub online estimator for Commonwealth recurrent funding for 2022 recorded at $175,214, neither of which accorded one with the other. It was suggested the budget was inaccurate, but Ms Schiel Zaini said it was about flexibility and change. No other estimates or updated budgets were produced to account for changes. The same forecasted budget for 2022 recorded Ms Schiel Zaini working 0.5 of a full-time teaching role. When it was put to her that the budgeted sum was not sufficient for work she actually performed at the school, she stated her wage was a buffer. Some weeks she did not take a wage at all, particularly for relief teaching, but the governing body knew about this. [69] The same forecasted budget for 2022 recorded identical superannuation contributions for February 2022 through to December 2022 at $1,144.70 per calendar month even though the superannuation guarantee increased from 10% to 10.5% from 1 July 2022. There was no evidence to suggest the school’s governing board knew of the increase other than to say it was still on a learning curve. [70] The forecasted budget for 2023 was based on 12 enrolled students with only 10 enrolled for the year and latterly 9 from August 2023. The minutes of the governing body’s board meeting of 25 February 2023 recorded that “adjustments to staff payroll will be made if enrolment is not back up to 12 by term 3”. There was no reduction in staff pay rate, but Ms Schiel Zaini recalled she reduced her hours to 0.2 of a full-time teaching role for the period August 2023 to December 2023 to compensate. [71] Ms Schiel Zaini stated that whilst the Mourilyan Road site was only approved for 12 students there were 16 students enrolled and that temporary council approval had been granted for the increased student number. [72] The school budget for 2024 created late in 2023 was based on 18 enrolled students but 16 was the limit at Mourilyan Road. It was suggested the budget was inaccurate in that once again, it recorded identical superannuation contributions for January 2024 through to December 2024 at $3,249.00 per calendar month even though the superannuation guarantee would increase from 11% to 11.5% from 1 July 2024. It was put to Ms Schiel Zaini that the 2024 budget produced to the Tribunal recording 18 student enrolments was unrealistic. She agreed. [73] Ms Schiel Ziani agreed that the 2024 school budget assumed increased rent at the rate prospectively payable at the Childs Street premises (owned by Ms Schiel Zaini) to which the school anticipated moving. However, that did not occur. It was suggested -- 10 of 15 -- 11 that the 2024 school budget was therefore inaccurate. No revised budget was produced to the Tribunal. [74] With respect to a debt of $11,295.00 to the Australian Taxation Office, which was brought to her attention in 2022, Ms Schiel Zaini said that the debt had since been paid off using school money. She could not point to where the debt/repayments were accounted for in any of the budgets produced by the school to the Tribunal. Ms Schiel Zaini revealed a GST debt of some $18,000.00 accrued, brought about by a non- realisation that initial Federal funding included GST payable. She said the debt had since been paid off but agreed that neither the debt nor its repayment was reflected anywhere in the 2022, 2023, or 2024 school budgets. She said the debt was reflected in a budget but not the ones before the Tribunal. [75] The school budget for 2024 recorded Federal funding of $156,311.00 payable in January 2024 that being 50% of the estimate based on August 2023 census. That sum was reduced to 25% but because the school had more money in the bank than it thought the change was not recorded in any budget before the Tribunal. [76] Finally, it was put to Ms Schiel Zaini that she was asking the Tribunal to accept financial reports based on the three budgets (2022, 2023, 2024). That being the case would she agree those financial reports must be unreliable. Ms Schiel Zaini said, “yes I agree”. [77] In finality on her own behalf Ms Schiel Zaini said it had been a huge learning curve, there was money in the bank and the school could pay its staff. She said, “I’m not showing it on paper”. [78] Kerry Hands one of the Board’s latter authorised persons and a qualified accountant gave evidence on behalf of the Board. She confirmed her four affidavits affirmed on 17 April 2023, 1 December 2023, 15 December 2023 and 1 March 2024. [79] In her affidavit of 17 April 20234 Ms Hands referred to the governing body’s meeting minutes dated 25 February 2023 not including documents which analysed the budget for 2023 in comparison with the predicted operating costs. The minutes recorded a staff pay adjustment in the event student enrolment did not increase from 10 to 12 by term 3 in 2023. Without evidence of a diligently prepared budget for 10 students there was no assurance that the school had access to adequate financial resources for future viability. [80] In her affidavit of 1 December 20235 Ms Hands stated she provided the Board with a report regarding a “change of attributes of accreditation for new site and relocate site application”. She did not consider there was enough current operating evidence received to give a measure of certainty of a profitable result in 2023 or of ongoing financial viability. Despite further information being requested and some being received there was still not enough current operating evidence received to change her view. In her report to the Board dated 25 September 2023 she stated the audited financial statements for 2022 as published on the Australian Charities and Not-for- Profits Commission (ACNC) site showed a deficit operating result of $69,198.00. 4 Hearing Book, 1101-1117 5 Hearing Book, 1205-1216 -- 11 of 15 -- 12 [81] In her affidavit of 15 December 20236 Ms Hands provided the Board with an updated review of the school’s financial viability based on additional information received 5 December 2023. That information consisted of a profit and loss statement, balance sheet to date, estimated expenditure and an updated budget for 2024 based on an 18- student enrolment. She considered the school would be viable to the end of 2023 and able to pay its debts, that there did not appear to be ongoing loan liabilities from related parties and that she did not know if the school was able to relocate to a new site and achieve 18 enrolments. However, if the school was not able to relocate and achieve 18 enrolments that might affect her view of the schools 2024 financial viability. [82] In her affidavit of 1 March 20247 Ms Hands stated having become aware that the school was subject to a change in timing of percentage of Federal government recurrent funding for 2024 and current enrolment being 16 students not 18 students as anticipated as well as the absence of an updated 2024 school budget based on 16 students at the current school site and the absence of an audited financial statement for the year ended 31 December 2024 she was now of the view there was a reduction in the ongoing financial viability of the school and its ability to meet its debts as and when they fell due. In evidence Ms Hands said, “they will struggle”. [83] The Board asserted that with respect to the educational programme there was still insufficient evidence to demonstrate that the Australian Curriculum was being implemented. Deficiencies centred around documentation illustrating the integration of the humanities and social sciences learning area, lack of examples of assessment tasks and reporting that included global assessment levels reflecting student progress. CONCLUSIONS [84] Darlingia seeks to have cancellation of its accreditation as a primary school educator set aside. [85] The long and somewhat tortured history of interaction, exchanges, inspections, reports and correspondence have been traversed here in some detail. The Board has exhibited an extraordinary degree of patience. Whilst it is clear a degree of compliance with accreditation criteria has been achieved and that there is a willingness to improve, the fact of the matter is that the school remains noncompliant. Nor was it ever the Board’s obligation to be an ongoing adviser to the school. Rather, it exists to ensure compliance. Nor was it for the school to simply be reactive to noncompliance identified by the Board that entrenches inadequacies in the conduct of the business of the school only to be rectified once identified by the Board. It was always incumbent on the school to comply with the legislation from the outset. In that regard, the legislation can be categorised as prescriptive. There was no learner’s licence applicable here. That is not to be confused with granting some degree of latitude in the way compliance is achieved. Where what is being dealt with is children’s education on an ongoing day to day basis and application of hundreds of thousands of dollars of public funding towards that education, a high level of compliance is expected. In that context the school’s statement that the “show cause process has genuinely vastly improved our capacity to act diligently and discharge our duties and 6 Hearing Book, 1935-1946 7 Hearing Book, 1959-1963 -- 12 of 15 -- 13 responsibilities” is out of place and misinterprets its obligations under the Accreditation Act. [86] In seeking a review of the Board’s cancellation, the onus lies with the governing body to convince the Tribunal that it is fit to continue governing the school, that it is financially viable and that there is compliance with accreditation criteria. There must be transparency and observational clarity such that the Board has a clear picture of the governing body’s competency as well as how the school is faring both financially and educationally. [87] The governing body’s governance shortcomings are numerous. Overall, there has been a persistent lack of reporting of current income and expenditure compared to budget forecasts. Bank statement balances at the beginning and end of a period whether weekly, monthly, or quarterly and debits and credits for any such period is rudimentary at best and not indicative of capacity of the school to pay its way at any given point. [88] Starting with 2022 there was no budget loaded into Quickbooks to compare actual operating costs against the budget forecast for 2022. As of 2022 there were no documents identified that enabled the governing body to assess monthly expenditure. Despite the school’s deficit operating result of $69,198.00 for 2022 there was no financial viability document provided during the course of 2022. The forecasted budget for 2022 based on 6 enrolled students estimated an operating surplus of $4,348.00 income over expenses ($225,776.00 - $221,428.00). For the same year government funding was budgeted at $214,776.00 but estimated by Ms Schiel Zaini using the online estimator for federal funding at $175,215.00. There was never any updated budget or revised estimate. One ponders how the governing body could possibly have known where it stood financially. [89] Additionally, the forecasted budget for 2022 recorded with respect to relief teacher the words “relief covered by principal”. Ms Schiel Zaini performed relief teaching without pay masking a shortage of available funds. The conclusion that can readily be drawn here is that funds were not available when needed. Even superannuation was not correctly budgeted failing to account for the percentage increase in mid-2022. Finally, there was the Australian Tax Office debt of $11,295.00 brought to Ms Schiel Zaini’s attention in 2022. Not only was there no record of the debt, it was not disclosed to the Tribunal. The same can be said for the $18,000.00 GST debt accrued and paid off but not recorded in any of the 2022, 2023 or 2024 budgets. It beggars belief that the governing body would not have been aware of these debts, or even if so aware, dealt with them in a transparent manner. [90] The 2023 calendar year fared no better. The forecasted budget for the year was based on 12 enrolled students with only 10 students ever enrolled to August that year followed by a reduction to 9 for the period August to December. The budget was inaccurate but never updated. Rather, there was a forewarning in the governing body’s meeting minutes of 25 February 2023 that “a staff pay adjustment would be made if the number of students enrolled did not increase from 10 to 12 by term 3”. The pay cut did not occur because Ms Schiel Zaini once again reduced her hours for the period August to December 2023 yet again masking the gap between the school’s capacity to cope financially and the reality on the ground. Nor was superannuation correctly budgeted, failing to account for the percentage increase in mid-2023. -- 13 of 15 -- 14 [91] The forecasted budget for 2024 was prepared in late 2023 based on prospectively 18 students for 2024 calendar year. The Mourilyan Road site was only ever approved for 12 students latterly temporarily for 16 students but never for 18 students. The budget also assumed increased rent for the Childs Street site, the move to which never occurred. Once again superannuation was not correctly budgeted, failing to account for the percentage increase effective mid-2024. Additionally, 50% Federal funding payable in January 2024 was reduced to 25%. Ms Schiel Zaini indicated that the school could cope because the school had more money in the bank than it thought. The Tribunal was not made aware of how much. Ms Schiel Zaini agreed the 2024 budget was inaccurate. No revised budget for 2024 was produced to the Tribunal. [92] Finally, there was a lack of awareness on the part of the governing body to fully understand the obligations that arose perforce of a governing body member also being the provider of two loans to the school as working capital. The relationship was characterised by informal transfers of funds from Ms Schiel Zaini’s own bank account to the school’s bank account. It took several exchanges between the Board and the governing body for the latter to grasp how to deal with such a situation at governing body level. Nor was there any evidence as to how the governing body would handle the proposed move to the Childs Street premises owned by Ms Schiel Zaini other than to say the governing body’s approach would be to minimise and manage any conflict of interest appropriately. [93] The totality of material produced to the Tribunal by the governing body and the enquiries by and reports to the Board disclose irregular timing of governing body meetings and minutes recorded well after meetings occurred. Whilst in the abstract that may not be reprehensible conduct, it accords with a governing body that was few in number and lacked governance training coupled with difficulty in accessing training. [94] Cross referencing, comparing and aligning financial reports to budgets, updated where necessary, consequent on changed circumstances, was essential to assessing the school’s financial position at any given point. Ms Schiel Zaini’s admission that accepting financial reports based on budgets (particularly where those budgets were flawed or not updated) made those financial reports unreliable is telling. [95] It is now over three years since the school opened its doors in February 2021. There is nothing that engenders confidence in the governing body going forward. [96] With respect to financial viability, it was not disputed that only one proper audited financial statement was prepared and that was for the 2022 year. The result was an operating deficit of $69,198.00. Although the accountant retained by the school expressed views in December 2021 and March 2023 that the school was financially viable, such views were based on budgeted projected enrolments which never eventuated. That made the accountant’s views worthless to assess financial viability. [97] In December 2023 Ms hands expressed the view that the school was financially viable to the end of 2023. That view relied on a profit and loss statement, balance sheet to date, estimated expenditure, and an updated budget for 2024 based on 18 student enrolments. However, in early 2024 she became aware of a change in timing of percentage of Federal government recurrent funding for 2024, a current enrolment of 16 students only, absence of an updated 2024 school budget and absence of an audited financial statement for the 2024 year. Consequently, she formed the view that there was a reduction in ongoing financial viability and the school’s ability to meet its debts -- 14 of 15 -- 15 as and when they fell due. At the very least that placed in doubt the school’s ability to pay its debts as and when they fell due and more probably an inability to so pay. [98] In the school’s own submissions filed 24 February 2024, its own newly appointed accountant expressed the view the school would be financially viable provided student enrolments were met. That did not happen. How the school would otherwise manage financially was not made apparent to the Tribunal. In short, ongoing financial viability has not been established. [99] With respect to the education programme, it was apparent some criteria had been addressed. However, deficiencies around documentation illustrating the integration of the humanities and social sciences learning area, lack of examples of assessment tasks and reporting that included global assessment levels reflecting student progress persist. [100] Considering the failures and irregularities of the governing body over the past three years, lack of clear financial viability and noncompliance with the education programme the Tribunal is of the view that the school’s application to set aside the Board’s cancellation ought to be refused and the Board’s cancellation decision confirmed. -- 15 of 15 --