Schools are home to students from a wide variety of cultural, social and economic backgrounds. A particular challenge for schools associated with having such a diverse student base is keeping track of students’ familial arrangements, particularly in circumstances where a Court has made a Parenting Order under the Family Law Act allocating parental responsibility.

Schools should be aware of how the provisions of the Family Law Act 1975 (Cth) (“the Act”), especially as they relate to Parenting Orders, may apply to the provision of the school’s services. Some key reasons why a school should keep track of any parenting orders include the following:

  • schools must ensure that a person enrolling a child has the legal standing to do so;
  • knowledge of Parenting Orders assists a school to fulfill its duty of care to a particular student;
  • school staff are likely to find themselves placed under pressure by a parent/guardian to enforce a Parenting Order; the school will need to be aware of the orders to fulfil its workplace health and safety obligations;
  • a school, even as a third party and not being bound to comply with a Parenting Order, may be held to have contravened the Parenting Order if the school intentionally prevented compliance with the order by, or aided/abetted a contravention of the order by, a person who is bound by the order. While this may be an unlikely situation, schools should be aware of this possibility.

With a wide range of recent amendments to the Family Law Act about to come into effect, schools should take note of these amendments and consider what they might mean for their own ongoing operations.

What are the amendments?

The Family Law Amendment Act 2023 (Cth) (the “Amendment Act”) was passed by both Houses in October 2023, outlining some significant changes to the current Family Law system. Many of its key provisions are set to commence on 6 May 2024.

Whilst the majority of changes will impact upon how parenting decisions will be made by the Court, there are a number of points that may be relevant to schools.

Parental responsibility” refers to the duties, powers, responsibilities and authority which parents have in relation to their children. From 6 May 2024, Courts will no longer make decisions based on the presumption that it is in the child’s best interests for both parents to have equal shared parental responsibility. Instead, the Courts will use a simplified set of criteria to determine what is in a child’s best interests and will allocate parental responsibility accordingly.

The simplified list of criteria will allow the Court to consider the unique circumstances in each parenting matter in a way that places the best interests of the child at the forefront of decision making. The amendments also require consideration of family violence orders, past family violence, abuse, and neglect in determining future parenting arrangements. The factors the Court will base decisions on are as follows:

  1. what arrangements would promote the safety (including safety from family violence, abuse, neglect, or other harm) of the child and the safety of each person who has care of the child (whether or not a person has parental responsibility for the child);
  2. any views expressed by the child;
  3. the developmental, psychological, emotional and cultural needs of the child;
  4. the capacity of each person who has, or is proposed to have, parental responsibility for the child to provide for the child’s developmental, psychological, emotional and cultural needs;
  5. the benefit to the child of being able to have a relationship with the child’s parents, and with other people who are significant to the child, where it is safe to do so; and
  6. anything else that is relevant to the particular circumstances of the child.

Schools should note that the definitions of ‘relative’ and ‘member of the family’ will be expanded to include Aboriginal and Torres Strait Islander concepts of family.

Schools should be attentive to the fact that Parenting Orders are likely to become less uniform and more tailored to the needs of individual families. This will mean that schools will need to look more carefully at Parenting Orders and parenting arrangements when considering issues of enrolment, or when seeking authorities and permissions from parents. There will still be allocations of parental responsibility, however, it is likely that there will be a higher proportion of Parenting Orders that generally allocate parental responsibility to one parent only, or allocate parental responsibility to one parent only in relation to education and/or healthcare matters.

How can Schools prepare for the new system?

Schools best equipped for dealing with the changing family law landscape are schools that have the following in place:

  • systems which ensure that the school has copies of all relevant and up-to-date court orders;
  • systems for ensuring that the school is aware of which parent has been allocated parental responsibility for education (and possibly religion and/or healthcare matters);
  • systems which ensure that the school is made aware of any changes to the allocation of parental responsibility;
  • an updated enrolment contract that sets out how the school will deal with parents who provide Parenting Orders with their child’s enrolment;
  • a Separated Parents Policy which sets out what will happen if the school is notified during the child’s time at the school that their parents have separated;
  • a thorough understanding of the school’s, and its staff’s, duties of care towards the school’s students; and
  • processes by which school decision makers can seek advice about specific situations.

WE CAN HELP

Do you need assistance drafting school policies?

Contact our School Law team on (07) 3252 0011.

Article written by Eustacia Yates and Jackson Litzow

Corney & Lind Lawyers was recently able to act for a non-state school in defending the school’s dress and haircut policies, and received a favourable outcome from QCAT. This decision highlights that school dress codes can be enforced, particularly where:

  • the policy has been made known to parents;
  • the dress code is representative of the culture and ethos of the school; and
  • the school otherwise acts reasonably in applying the policy.

This article considers the recent decision of Senior Member Fitzpatrick in XA (BY ZA) v School [2024] QCAT 15, and the implications arising from this for schools.

 

THE FACTS

The parties’ names have been de-identified to protect the privacy of the child the subject of this proceeding.

XA was enrolled as a Prep student at the School for the year commencing 2024. He is a boy with long hair, which he typically wears in a “neat topknot style”.

At all material times the School had in place a detailed Code of Behaviour which includes the following:

Pride in appearance is a measure of self-esteem and loyalty to the College. Students must wear their full uniform (formal or sporting), without any clothing additions or variations, and ensure it is maintained clean and in good repair. The formal uniform is to be worn at all College activities, and to and from school, unless otherwise advised.

Hairstyles must be in keeping with the neat and conservative style of the uniform, and as defined by the College. This means that hair must be a natural colour, and fashion trends or extremes of hair length are not acceptable. Fringes must be above the eyebrows. Long fringes swept or held back by hair product are not acceptable. Boys’ hair must be trimmed about the collar and the ears, and must not have any significant difference in length between the side and the top; girls must tie hair back from the face with College approved accessories only.

ZA, the father of the young child, filed a Complaint with the Queensland Human Rights Commission (QHRC) in late 2023, framed in terms of direct and indirect discrimination on the basis of gender. A conciliation conference was scheduled between ZA and the School for 8 February 2024, some two and a half weeks after XA was due to commence classes.

On 12 January 2024 ZA filed an application in QCAT pursuant to section 144 of the Anti-Discrimination Act 1991 (Qld) (the AD Act) seeking an interim order, or injunction, that XA:

  • be accepted as enrolled at the School;
  • commence on 22 January 2024 without complying with the School’s hairstyle policy which would require XA to have his hair cut; and
  • not be bullied or subjected to negative comments about his hair by students or staff.

 

OUTCOME

In declining to grant the injunction, Member Fitzpatrick found:

  • no prejudice to the QHRC process or any order the Tribunal might make if no interim order was made in the terms sought by ZA;
  • XA was unlikely to establish a prima facie case of direct discrimination because he was unlikely to establish that different treatment with respect to hair is unfavourable treatment, which is a necessary element of the claim;
  • on a preliminary assessment, XA did not demonstrate a prima facie case with respect to a claim of indirect discrimination; and
  • the balance of convenience favoured the School and the application of its Code to all students.

 

PREVIOUS DECISIONS

Many schools will be aware of the 2020 Judgment by Member Traves in Taniela v Australian Christian College Moreton Ltd [2020] QCAT 249 and the subsequent 2022 determination by Senior Member Howard and Member Fitzpatrick in the Australian Christian College Moreton Ltd & Anor v Taniela [2022] QCATA 118.

In that case, Cyrus Taniela was a young boy of Cook Islander and Niuean descent. It is a tradition or cultural practice associated with Cook Island/Niuean culture for the eldest son to undergo a hair-cutting ceremony at a time of choosing of the parents. Shortly after commencing school, Cyrus’ mother was informed that his hair was in breach of the uniform policy, and that failing a haircut he would be unenrolled from the school. It was held that this amounted to indirect discrimination on the basis of Cyrus’ race pursuant to s 39 of the AD Act.

 

LESSONS FOR SCHOOLS

What then, can schools learn from the 2024 decision by the Tribunal, and how is this case different from the findings in Taniela? We summarise the key takeaways below:

  • a dress code is not required to make provisions which apply identically to boys and girls.[1] In other words, rules concerning appearance will not be discriminatory because their content is different for men and women if they enforce a common principle of smartness or conventionality, and taken as a whole, neither gender is treated less favourably in enforcing that principle.
  • Unlike Cyrus, there was no evidence that XA was unable to comply with the requirement that he cut his hair, the length of which was a matter of personal choice.[2] At paragraph [12] of the Judgment, the Member stated:

There is no suggestion of any racial, cultural, religious or gender identity significance to the manner in which XA wears his hair. Given the very young age of XA which I infer to be 4 or 5 years, it is reasonable to assume that XA’s hairstyle is a styling choice made by his parents and that the views set out in the Complaint as to restriction and disadvantage are the views of ZA.

  • In the absence of any attribute such as race, culture (applicable in Taniela), religion or gender identity such that long hair is a relevant characteristic, the requirement that boys’ hair be trimmed above the collar was not unreasonable.[3]

 

WE CAN HELP

Do you need assistance drafting school policies which uphold your school’s traditions and values while being responsive to the diverse identities and needs within the student body?

Do you need assistance in evaluating and/or responding to a request for accommodation?

Contact our School Law team on (07) 3252 0011.

 

[1] At [26].

[2] At [28].

[3] At [30].

It is a truism that the duties imposed on the modern school are various and onerous – duty of care to children, duties to employees under industrial relations or WHS legislation, responsibilities to the Non-State Schools Accreditation Board [JT|C&LL1] and Australian Charities and Not-for-Profits Commission, and duties arising from the multitude of contractual arrangements to which an educational institution is party.

A legal duty that perhaps once occupied less attention than its counterparts, privacy law is now an increasingly pertinent issue faced across the education sector, warranting close consideration in this growing technological era.

Privacy Law – The Basics

The Australian Privacy Principles (or Privacy Principles) are the cornerstone of the privacy protection framework in the Privacy Act 1988. They apply to any organisation or agency the Privacy Act covers, including an individual, body corporate, partnership, unincorporated association, or trust. By virtue of this broad definition, the ambit of the Privacy Principles extends to educational entities.

The Privacy Principles establish the minimum standards for the collection, use, access, and disclosure of personal information (amongst other things). The Principles, in conjunction with the Privacy Act, provide a mechanism for individuals to access personal information held by an organisation where both the Applicant and the information sought meets certain requirements.

Australian Privacy Principle 12 – Access to Personal Information

When an access request is made, a school has a number of obligations:

  1. To reply to the request within a reasonable period after the request is made.[1]
  2. To give access to the information in the manner requested by the individual if it is reasonable and practicable to do so.
  3. Where refusing to give access:
    1. to take such steps (if any) as are reasonable in the circumstances to give access in a way that meets the needs of the entity and the individual; and/or
    2. to give the individual a written notice setting out reasons for the refusal and mechanisms available to complain about the refusal.

Exemptions

The general proposition is that personal information must be disclosed where requested, unless one of the stated exemptions applies. Of particular relevance to the educational sector are the following exceptions:

  • APP 12.3(b): Giving access would have an unreasonable impact on the privacy of other individuals;
  • APP 12.3(f): Giving access would be unlawful;
  • APP 12.3(g): Denying access is required or authorised by or under an Australian law or a court order; or
  • APP 12.3(j): Giving access would reveal evaluative information generated within the entity in connection with a commercially sensitive decision-making process.

For the full list of exemptions, refer to rule 12.3 of the Privacy Principles.

Privacy of Other Individuals

By way of example:

  1. Students: name, birth certificate, school reports, race, religion, and medical reports;
  2. Parents: name, marital status, race, religion; and
  3. Staff: education, tax file numbers, educational qualifications, job references, race and religion.

Commercially Sensitive Decision-Making Process

For something to be commercially sensitive, the decision-making process should involve commercially valuable information, the value of which would be diminished if the information were disclosed. For example, decisions about proposed projects that, if disclosed, would place the entity at a commercial disadvantage.[2]

Denying Access is Required

By way of example, documents that were brought into existence for the dominant purpose of enabling a school to receive legal advice and documents between lawyers and the respondent involving confidential communications.[3]

“Reasonable and Practical

Thus, as a starting point, schools must acknowledge a legal obligation to provide access to the information requested and express a commitment to take such steps as are reasonable in the circumstances to give access in a way that meets the needs of the entity and the individual.[4]

To this extent, schools are expected to consult with the individual to satisfy their request as best they can within the parameters established by Privacy Principle. Some examples of alternative ways of giving access are:

  • deleting any personal information for which there is a ground for refusing access and giving the redacted version to the individual;
  • giving a summary of the requested personal information to the individual;
  • giving access to the requested personal information in an alternative format;
  • facilitating the inspection of a hard copy of the requested personal information and permitting the individual to take notes; or
  • facilitating access to the requested personal information through a mutually agreed intermediary[5]

Other Considerations

On 16 February 2023 the Federal Attorney-General’s Department published a report on a review of the Privacy Act 1988 (Cth). As at the date of this article, feedback is currently being sought. The proposed recommendations, if passed, would have further impacts on independent schools.

Quite apart from the requests under the Privacy Act 1988 (Cth), interested parties may have other avenues to seek information from a school, such as by way of a subpoena or a preliminary disclosure application.

How Can We Help?

Privacy law is a nuanced area, with the potential for severe consequences in the event of non-compliance. If your school is looking to further understand your obligations, seeking a review of your Privacy Policy to ensure compliance with the legislative framework, or have received a request for information, the friendly team at Corney & Lind Lawyers can help. Contact our team today on (07) 3252 0011 or email the writers of this article at James.Tan@corneyandlind.com.au and Courtney.Linton@corneyandlind.com.au


[1] APP 12.4

[2] ‘ZG’ and Sydney Catholic Schools Ltd (Privacy) [2021] AICmr 89

[3] ‘ZN’ and a School (Privacy) [2021] AICmr 95

[4] ZN’ and a School (Privacy) [2021] AICmr 95

[5] ‘ZG’ and Sydney Catholic Schools Ltd (Privacy) [2021] AICmr 89


 

[JT|C&LL1]While they have obligations to ATO in relation to PAY-G, they don’t pay tax.

The prolific growth of the digital economy was hailed as revolutionary. With a multi-directional exchange of ideas and other forms of expression, online technological advancements have facilitated the inexpensive exchange of information across national and international boundaries[1]. However, the prolific nature of the digital age brings to the fore alarming questions regarding the large caches of information about individuals being generated, used, disclosed and stored, including the young and vulnerable. Research highlights that “Not all young people understand the need to protect their information…[2]. Let us unpack the Privacy Act Amendments.

The vulnerability of people’s information in the digital age has prompted the release in February 2023 of the Privacy Act Review Report (the Report), which contains 116 proposals for reform of the Privacy Act 1988 (Cth) (the Act). As at the date of this article, feedback is currently being sought to the Report.

For our school and church clients, some the most significant proposals in this Report pertain to children and vulnerable individuals.

Children’s Privacy

Children increasingly rely on online platforms, applications and devices in their everyday lives, such that many young people view their online and offline lives as ‘inextricably linked’.

The implications? The Report found that children are increasingly being ‘datafied’, with information regarding their activities, gender, interests and hobbies, location, mental health and relationships being collected.

The proposed solution? Legislatively enshrine child appropriate privacy policies and collection notices. Modelled on the UK’s Age Appropriate Design Code, the proposals would mandate the companies create a safe space for [children] to learn, explore and play, not by seeking to protect children from the digital world, but by protecting them within it.

Specific proposals include:

16.2. Valid consent must be given with capacity, and an entity must decided if an individual under the age of 18 has the capacity to consent on a case-by-case basis. That is, the consent of a child is only valid if one could reasonably expect that the consenting child would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting.

16.3. Collection notices and privacy policies, in particular for any information addressed specifically to a child, should be clear and understandable.

16.4. Entities must have regard to the best interests of the child as part of considering whether a collection, use or disclosure of information is fair and reasonable in the circumstances.

16.5. Introduce a Children’s Online Privacy Code that applies to online services that are ‘likely to be accessed by children’.

The Privacy of People Experiencing Vulnerability

Certain groups of consumers may lack the technical, critical and social skills to engage with the internet in a safe and beneficial manner.

Unlike children however, who constitute an easily definable segment of society, identifying who constitutes a vulnerable person is a more challenging matter. Further, clarifying the issues and identifying the options available to protect these individuals once they are recognised to be vulnerable is a nuanced endeavour.

Presently, the Report has adopted a three-pronged approach:

17.1 The Report proposes the inclusion of a non-exhaustive list of both individual characteristics and situational factors, which can alert an entity to the potential that an individual may be at a greater risk of privacy harms. This would assist entities to take proactive steps to minimise risks.

17.2. Guidance on capacity and consent should be updated to reflect developments in supported decision-making.

17.3. (Less relevant to schools and churches) Further consultation should be undertaken to help ensure that financial institutions can act appropriately in the interests of customers who may be experiencing financial abuse or may no longer have capacity to consent.

Supplementary Provisions

Of course, improved privacy protections for all individuals through a number of the proposals in the Report will address many of the issues faced by children and people experiencing vulnerability. These provisions include:

20.4. Introduce a requirement that an individual’s consent must be obtained to trade their personal information.

20.5. Prohibit direct marketing to a child unless the personal information used for the direct marketing was collected directly from the child and the direct marketing is in the child’s best interests.

20.6. Prohibit targeting to a child [for commercial purposes], with an exception for targeting that is in the child’s best interests.

20.7 Prohibit trading in the personal information of children.

20.8.Targeting individuals should be fair and reasonable in the circumstances. This would be likely require consideration of whether the targeting poses risks of unjustified adverse impact or harm to individuals.

Key Takeaways

The proposed reforms to privacy laws would appear to suggest an increasing need in the future for schools and churches to engage on an even greater scale with privacy related issues.

If you are seeking further assistance in relation to privacy matters, please feel free to contact the writers James Tan (james.tan@corneyandlind.com.au) and Courtney Linton (courtney.linton@corneyandlind.com.au).


[1] Zi En Chow, ‘Evaluating the Approaches to Social Media Liability for Prohibited Speech’ (2019) 51(4) New York University Journal of International Law and Politics 1293.

[2] eSafety Commissioner, ‘Online safety for young people with intellectual disability’ December 2020 (https://www.esafety.gov.au/research/online-safety-for-young-people-intellectual-disability).

What impact do unpaid school fees have on students and schools? 

Parents can decide to send their children to private schools or colleges for a variety of reasons. These reasons could be related to trust in the quality of private education, or the religious education provided by the school. 

Unfortunately, the ability for a family to meet school fee payments can deteriorate very rapidly or a variety of reasons. This can negatively affect the student’s education as well as the school/college’s financial position, particularly where budgets have already been set. 

Fortunately, our firm has lengthy experience in advising on debt recovery matters for the school and education sector. Our breadth of experience informs this article, which aims to assist schools in implementing strategies to minimize a school’s loss, both financially and in the delivery of stable education to students. 

Strategy 1 – Address Defaults Early with Parents 

At the start of a student’s enrolment, parents are always able to meet private school tuition fees. However, a family’s circumstances can change very rapidly, and may not occur with any malicious intent of the parent. 

Some reasons that a default in tuition fees may be due to difficult family circumstances, including an unexpected redundancy, family law proceedings, or increased medical expenses to address a serious illness. These circumstances usually also have an effect on a student’s education. 

What are the benefits of early intervention in school fees? 

If a default in tuition fees is picked up early, the school and the parents should maintain open and frank conversations, so that an alternative and suitable agreement can be put into place. These discussions and ensuing documents do not prejudice the strict legal rights of the school or college if they are conducted on a “without prejudice” basis. 

For example, if a parent is in default due to increased legal spend as family law proceedings are afoot, it may be possible to reach an agreement for alternative suitable arrangements (e.g. school fees are deferred and paid out of a family property settlement). 

When parents are engaged in early discussions, this may prevent unpaid school fees from ‘spiralling out of control’. Schools will also be able to pre-empt any future legal issues that may arise out of a family’s changing circumstances (e.g. it is common for schools to get unnecessarily caught in the middle of family law proceedings). 

In our experience, neglected defaults are the ones at risk of ‘spiralling out of control’. A parent’s capacity to repay is reduced as additional costs are added to the debt, or other debtors commence recovery action against the parent/s. 

Strategy 2 – Involve a Lawyer 

Unpaid school fees relate to the recovery of a debt, which can attract the services of a debt collector. However, we suggest that retaining a lawyer has several added benefits over retaining a debt collector. 

Why engage a lawyer over a debt collector? 

A debtor is prompted to the seriousness of an unpaid debt when they receive a Letter of Demand from a lawyer. Such a letter will usually remind the debtor that an unpaid debt gives the school the right to commence legal proceedings. 

What options are available after a Letter of Demand? 

In the event that the Letter of Demand is ignored, a lawyer can assist the school in escalating legal proceedings in pursuit of the debt. A debt collector will need to engage lawyers to do this. 

Lawyers are also regulated by strict ethical duties (although debt collectors are also highly regulated). This ensures that procedure is followed and works towards preserving the reputation of the school. 

If you were to retain a lawyer, they would have a better understanding of associated legal risks and are able to advise you on preparing enforceable agreements if alternative payment terms are agreed upon with the parent/s. 

Strategy 3 – Review Your Enrolment Contract 

Having a clearly worded and enforceable enrolment contract can be an effective deterrent against potential defaults. 

For a school, it is important to review the enrolment contract from an enforcement perspective. Steps should be taken to ensure that an enrolment contract is able to be relied upon to enforce matters such as (without limitation): 

  • Payment of up-front monies 
  • Termination in the event of un-remedied default 
  • Payable notice in the event of early termination by parent/s 
  • Interest payable on unpaid monies, and 
  • Passing on additional costs of recovery (i.e. legal fees) 

Need a streamlined debt recovery process? 

We have an inexpensive and affordable debt recovery process that is tailored specifically to your priorities. Our firm has significant experience in understanding the schools and education sector, and we are happy to develop this process for you. 

We offer cost-effective legal solutions that take into consideration your interests, of which other debt collectors may be unaware.  

This includes fixed-fee recovery options and discounts for pursuing multiple debts. Please feel free to contact us today on (07) 3252 0011 if you would like to discuss debt recovery options further. 

When are arrangements with related charitable entities ok and when are they not?

The amended Education (Accreditation of Non-State Schools) Act 2001(Qld), has been passed by the Queensland Parliament and received Royal Assent on 25 August 2017.

A number of the amendments seemed to be in response to: Malek Fahd Islamic School Limited and Minister for Education and Training [2016] AATA 1087 (23 December 2016). See: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/AATA/2016/300.html?context=1;query=Malek Fahd Islamic School Limited and Minister for Education and Training

Some extracts from the judgement:

At para 42 – 44:

… there is little doubt that MFISL [school] was making distributions to AFIC [parent religious body] over a long period. …. Those distributions were indirect, in that they were provided to AFIC in the form of inflated rents that were paid in advance and in respect of services allegedly provided by AFIC. The expenditures that improved the value of AFIC properties also amounted to an indirect distribution of MFISL funds; the payments in respect of services supposedly provided by AFIC can be characterised in the same way.

It also seems likely that MFISL funds were applied otherwise than for the purposes of the school, and not in connection with the function of the approved authority. While schools commonly pay rent on properties they use for educational purposes, the payment of inflated rents or advance payments without any proper basis is not acceptable. Advancing uncommercial loans to a parent entity is also impermissible. The funds expended in these transactions were not applied for MFISL. They were applied for the benefit of AFIC, or someone else.

In all the circumstances, I am satisfied MFISL was conducting a school ‘for profit’ within the meaning of that expression in s 75(3). The fact profits were being distributed to or applied for the benefit of AFIC weighs heavily in favour of that conclusion. The acknowledged shortcomings in the financial policies and practices that were evident at the time also point to that conclusion.

The Parliamentary Committee report into the Bill that proposed the amended Act is instructive.

The following extract from the Department is worth noting in respect of arrangements between a School and an associated charitable entity (for example a religious body).

The department advised that arrangements with other not-for-profit entities such as parent associations and religious organisations that provide a benefit for the school would not be captured by the proposed definition of prohibited arrangement. (Point 2.5)

Governors of a school have always had a duty to act in the best interests of the school. Connections (direct or indirect) between governing bodies between the school and another entity that could reasonably be excepted to compromise independence of the school governors when making financial decisions will lead to a failure to meet government funding eligibility criteria (s10 of the Act). (This requirement was in essentially in the previous Act but in a different manner for example section 93). Importantly this based on an objective test of “reasonably be expected.” The mere fact that there is a connection would in our view never be enough. The key is that school governors must act as governors of the school in the best interests of the school (and not at the behest or under the direction of another related charity, for example a church).

Keys for relationship a School / College and related charitable entities (going forward), which are really not new:

  1. Lease / Licence rent and charges by related entities must be reasonable and commercial (supported by evidence)
  2. The length of tenure must be reasonable and commercial (at least the useful life of buildings so not capital improving land belonging to someone else)
  3. Loan Agreements to related entities should be on reasonable commercial terms
  4. Management / Services charges by related entities must be on reasonable commercial terms
  5. There should be written Board policies & practices about the above matters, consistently applied in accordance with their terms
  6. Gifts to related entities should be minor and incidental (ideally from trading activities), including gifts to start a new school that is not a campus of an existing school and then only for the purpose for advancing the school’s philosophy (s7 of the Act)
  7. Conservatively trading activities should have some intrinsic connection with (in aid of / part of) operating a school
  8. Conservatively trading activities that do not have intrinsic connection with operating a school should be housed in a separate legal entity (not receiving government funding)
  9. Governors of the College make decisions in the best interests of the College not subject to direction from another entity.

Andrew Lind (Director) is Deputy Chair of the Queensland Law Society Not-for-profit and Charity Law Committee and a member of the Law Council of Australia Charity & Not-for-Profit Law Committee. In these roles he is regularly involved in making submission on proposed not-for-profit law reform.

This article examines the decisions of Malek Fahd Islamic School Limited and Minister for Education and Training [2016] AATA 1087 (23 December 2016)Malek Fahd Islamic School Limited v Minister for Education and Early Childhood Learning [2022] NSWSC 1176 (1 September 2022); and the appeal from the 2022 outing in  Malek Fahd Islamic School Limited v Minister for Education and Early Learning [2023] NSWCA 143 (29 June 2023).

These decisions arise out of a common factual matrix but deal with distinct issues.

PART 1: Funding Compliance and lessons for Schools in dealing with related parties

In 2016, the Deputy President of the Administrative Appeals Tribunal (“AAT”) handed down his decision in Malek Fahd Islamic School Limited and Minister for Education and Training [2016] AATA 1087 (23 December 2016) – determining that Malek Fahd Islamic School (“the School”) had failed their funding compliance obligations by previously operating in a way that was inconsistent with the conditions of the government funding the School was receiving.

The School was receiving government grants in the form of “financial assistance” under the Australian Education Act 2013 (Cth) (“the Act”) on the basis that the School was operating in a not-for-profit manner and was a “fit and proper” entity.

During a portion of the time it was receiving the grants, the School was found to be: [i]

  • making indirect distributions to the Australian Federation of Islamic Councils Inc. (its parent religious body) (“AFIC”) in the form of inflated rents paid in advance and in respect of services allegedly provided by AFIC;
  • expending monies that improved the value of AFIC properties;
  • applying its funds otherwise than for the purposes of the School; and
  • providing loans to AFIC on “uncommercial” terms.

Takeaways

This case reinforced the need for Schools and Colleges to appropriately consider various factors when seeking to deal with its parental bodies and/or related charitable entities to ensure funding compliance – for example:

  1. All School expenditure must be solely for the advancement of the purposes of the School (proper purpose) which includes:

a. being necessary for that advancement; and

b. at not more than commercial rate cost (from the perspective of the School).

  1. Lease / Licence rentand charges by related entities must be necessary and be reasonable and commercial (supported by objective evidence). The length of tenure must also be reasonable and commercial (at least the useful life of buildings so not capital improving land belonging to someone else without reasonable rights of use);
  2. Loan Agreements, especially to related entities, should be approached with great caution. Commercial terms alone may not be enough (even if such terms include securities);
  3. Management / Services and charges by related entities must be necessary and on reasonable commercial terms;
  4. There should be written Board policies & practices about the above matters, consistently applied in accordance with their terms;
  5. Gifts to related entities should be minor and incidental (ideally from trading activities), including gifts to start a new school that is not a campus of an existing school – and then those gifts should only be for the purpose of advancing the school’s philosophy and aims;
  6. Conservatively, trading activities whose risks expose the assets of the School to liability should have some intrinsic connection with (in aid of / part of) operating a school.
  7. Governors of the College, who make decisions in the best interests of the College, should not be subject to direction from another entity.

PART 2: Failing to strictly comply with funding conditions, even after most non-compliance has been dealt with, may trigger FULL funding recovery rights

This part examines the decisions of Malek Fahd Islamic School Limited v Minister for Education and Early Childhood Learning [2022] NSWSC 1176 (1 September 2022).

The School again found itself in dispute with the New South Wales Minister for Education and Early Childhood Learning despite having made significant changes to its structure and governance. This dispute was over whether approximately $50,000 paid out in offence of the not-for-profit requirement in two years could result in the ability of the government to require the return of $11 million in funding for those two years (2014 and 2015) by reducing recurrent funding over the next five years. The Court at first instance and on appeal did not disturb the decision of the Minister.

This case was effectively about the meaning of the following provision in the Education Act 1990 (NSW) (the “Act”):

83C Financial assistance not to be provided to schools that operate for profit

(1) The Minister must not provide financial assistance (whether under this Division or otherwise) to or for the benefit of a school that operates for profit. ….”

The “Act”, particularly under section 83J, enabled the Minister to take steps to recover the amount of any financial assistance provided” to the School if the School was acting in a way that was not compliant with the Act’s financial assistance conditions.

The Court found that the words ’the amount of any financial assistance provided, “[are] intended to allow the Minister to recover “each amount of financial assistance”, or all of the different amounts provided.” (Paras 201 and 228).

The Court also found:

  • Whilst the Minister had a discretion as to whether to recover a round of funding (for example recurrent funding in 2014), it was not a discretion as to partial recovery of a particular round of financial assistance provided, but that it was all or nothing of a particular round (Paras 229 -232);
  • “If all that is to be recovered is the amount of “profit”, then schools utilising income for purposes other than the operation of the School would know that their only potential loss is the monies so used” (Para 247); and
  • “The prohibition on the provision of financial assistance to schools that run for-profit or are non-compliant is absolute. While the Minister has a discretion not to recover monies paid to such schools, that is a discretion to ameliorate the effects of the absolute prohibition in appropriate circumstances” (Para 248).

The Court:

  1. dismissed each of the grounds of appeal put forward by the School;
  2. found in favour of the Minister; and
  3. ordered that the School pay the Minister’s costs.

PART 3: Appeal to the New South Wales Court of Appeal in relation to Limitation Act considerations

Malek Fahd appealed the findings of the Court in relation to the operation of the Limitation Act 1969 (NSW) (“Limitation Act”) in this matter. The appeal judgement is found at Malek Fahd Islamic School Limited v Minister for Education and Early Learning [2023] NSWCA 143 (29 June 2023)

Malek Fahd argued that because the School was operating for-profit in 2014-2015, and because the Minister did not decide to commence recovery of financial assistance from the School until March of 2021, the Limitation Act would prevent the Minister from pursuing such recovery. This was because the Limitation Act had a 6-year limitation window on taking action on a cause of action (see in particular sections 14(1) and 63).

Section 83J allowed the Minister to recover from non-compliant schools “an amount [of financial assistance]…:

a. as a debt in a court of competent jurisdiction, or

b. by reducing future amounts of financial assistance payable by the Minister to or for the benefit of the school concerned,

or both.”

The Minister took steps to the recover financial assistance pursuant to subclause (b).

The Court of Appeal found that Pt 3 Div 7 of the Education Act contained its own “self-contained provisions” relating to recovery of payments of financial assistance to non-compliant schools (para 8), and that the Minister making recoveries through subclause (b) did not engage the Limitation Act’s debt recovery limitation periods (paras 56-58).

Therefore, the Limitation Act did not apply to prevent the Minister from recovering, via reduction in future payments, the financial assistance provided to the School.

In obiter, the Court of Appeal also considered the case where the financial assistance was to be recovered as a debt through a Court. Contrary to the primary judge’s opinions (that the cause of action arose on a recommendation from the Advisory Council to make a non-compliance declaration against a school), the Court of Appeal found that the cause of action actually commenced when the Minister was satisfied “that a school had been the recipient of an unlawful payment, or that the school is otherwise a non-compliant school.” (Para 64).

As a result:

  1. the appeal was dismissed; and
  2. Malek Fahd was required to pay the Minister’s costs.

Takeaways

Strict compliance with the not-profit requirement is crucial. The payments in question were all related party payments. Therefore, well-maintained Related Party and Conflict of Interests policies and registers are essential to assisting schools in upholding their compliance obligations.

Relevance in other jurisdictions

This series of cases has relevance in states other than New South Wales.

In Queensland and Victoria, for example, the relevant legislation in part provides:

This article was written by Andrew Lind and Jackson Litzow 

DISCLAIMER: Corney & Lind Lawyers provides articles on its website for general and informative purposes only. Any articles on our website are not intended as, nor should they be taken as, constituting professional legal advice. If you have an issue that requires legal opinion, Corney & Lind Lawyers recommends you seek independent legal advice that is appropriately tailored to your circumstances from an appropriately qualified legal representative.

 

ENDNOTES

  • [i] Malek Fahd Islamic School Limited and Minister for Education and Training [2016] AATA 1087 (23 December 2016), [29],[42]-[44].

The prolific growth of the digital economy was hailed as revolutionary. With a multi-directional exchange of ideas and other forms of expression, online technological advancements have facilitated the inexpensive exchange of information across national and international boundaries [1]. However, the prolific nature of the digital age brings to the fore alarming questions regarding the large caches of information about individuals being generated, used, disclosed and stored, including the young and vulnerable. Research highlights that “Not all young people understand the need to protect their information…[2]. Let us unpack the Privacy Act Amendments.

The vulnerability of people’s information in the digital age has prompted the release in February 2023 of the Privacy Act Review Report (the Report), which contains 116 proposals for reform of the Privacy Act 1988 (Cth) (the Act). As at the date of this article, feedback is currently being sought to the Report.

For our school and church clients, some the most significant proposals in this Report pertain to children and vulnerable individuals.

Children’s Privacy

Children increasingly rely on online platforms, applications and devices in their everyday lives, such that many young people view their online and offline lives as ‘inextricably linked’.

The implications? The Report found that children are increasingly being ‘datafied’, with information regarding their activities, gender, interests and hobbies, location, mental health and relationships being collected.

The proposed solution? Legislatively enshrine child appropriate privacy policies and collection notices. Modelled on the UK’s Age Appropriate Design Code, the proposals would mandate the companies create a safe space for [children] to learn, explore and play, not by seeking to protect children from the digital world, but by protecting them within it.

Specific proposals include:

16.2. Valid consent must be given with capacity, and an entity must decided if an individual under the age of 18 has the capacity to consent on a case-by-case basis. That is, the consent of a child is only valid if one could reasonably expect that the consenting child would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting.

16.3. Collection notices and privacy policies, in particular for any information addressed specifically to a child, should be clear and understandable.

16.4. Entities must have regard to the best interests of the child as part of considering whether a collection, use or disclosure of information is fair and reasonable in the circumstances.

16.5. Introduce a Children’s Online Privacy Code that applies to online services that are ‘likely to be accessed by children’.

The Privacy of People Experiencing Vulnerability

Certain groups of consumers may lack the technical, critical and social skills to engage with the internet in a safe and beneficial manner.

Unlike children however, who constitute an easily definable segment of society, identifying who constitutes a vulnerable person is a more challenging matter. Further, clarifying the issues and identifying the options available to protect these individuals once they are recognised to be vulnerable is a nuanced endeavour.

Presently, the Report has adopted a three-pronged approach:

17.1 The Report proposes the inclusion of a non-exhaustive list of both individual characteristics and situational factors, which can alert an entity to the potential that an individual may be at a greater risk of privacy harms. This would assist entities to take proactive steps to minimise risks.

17.2. Guidance on capacity and consent should be updated to reflect developments in supported decision-making.

17.3. (Less relevant to schools and churches) Further consultation should be undertaken to help ensure that financial institutions can act appropriately in the interests of customers who may be experiencing financial abuse or may no longer have capacity to consent.

Supplementary Provisions

Of course, improved privacy protections for all individuals through a number of the proposals in the Report will address many of the issues faced by children and people experiencing vulnerability. These provisions include:

20.4. Introduce a requirement that an individual’s consent must be obtained to trade their personal information.

20.5. Prohibit direct marketing to a child unless the personal information used for the direct marketing was collected directly from the child and the direct marketing is in the child’s best interests.

20.6. Prohibit targeting to a child [for commercial purposes], with an exception for targeting that is in the child’s best interests.

20.7 Prohibit trading in the personal information of children.

20.8.Targeting individuals should be fair and reasonable in the circumstances. This would be likely require consideration of whether the targeting poses risks of unjustified adverse impact or harm to individuals.

Key Takeaways

The proposed reforms to privacy laws would appear to suggest an increasing need in the future for schools and churches to engage on an even greater scale with privacy related issues.

Appointment

If you are seeking further assistance in relation to privacy matters, please feel free to contact us  on (07) 3252 0011 to book a consultation with the writers James Tan and Courtney Linton.


 

[1] Zi En Chow, ‘Evaluating the Approaches to Social Media Liability for Prohibited Speech’ (2019) 51(4) New York University Journal of International Law and Politics 1293.

[2] eSafety Commissioner, ‘Online safety for young people with intellectual disability’ December 2020 (https://www.esafety.gov.au/research/online-safety-for-young-people-intellectual-disability).

The Queensland Government has recently announced significant developments within the Queensland early childhood education sector – with the Government committing an additional $645 million to its investment into kindergarten services to make kindergarten free for all Queensland families as of 1 January 2024. This is expected to save Queensland families around $4,600 per annum, and will allow over 50,000 more children to access kindergarten services for free. The newly-announced scheme details that the Queensland Government will cover the costs of a kindergarten-aged child enrolled in a government-approved educational program for up to 15 hours a week (or 600 hours a year). Accordingly, this means that funding will likely be accessible to all kindergartens to assist them in covering the costs of providing kindergarten education – provided that the kindergarten offers a “government-approved program”.[1]

Whilst we still await the full detail, the “government-approved program” limitation on accessibility to the scheme highlights that Schools offering kindergarten services and seeking to take advantage of the scheme will likely need to ensure that they are approved kindergarten program providers who offer approved kindergarten programs, and that they elect to opt into the scheme: [2]

  1. The School should be an approved kindergarten program provider in that:[3]

a. The School operates a service that has a current service approval under the Education and Care Services National Law or the Education and Care Services Act 2013 (Qld);

b. The School is registered as an “approved kindergarten program provider” and has not had such status suspended or revoked;

c. The School has a rating of working towards the National Quality Standard (or higher);

d. The School provides a learning program that:

i. Is available for children who are in the year before Prep (i.e. the children must be at least 4 years of age before 30 June in the year they commence kindergarten);

ii. Is run for 15 hours per week for 40 weeks (or 600 hours per year); and

iii. Is delivered by a qualified early childhood teacher (i.e. a person qualified as an early childhood teacher under the Education and Care Services National Law (and Regulations) or the Education and Care Services Act 2013 (Qld)); and

e. For particular types of providers:

i. It is a member or affiliate of a central governing body (sessional kindergartens only); or

ii. It has the correct eligibility status to receive Child Care Subsidy payments on behalf of eligible families (long day care service providers only).

2. The School must provide an approved kindergarten learning program that is based on either:[4]

a. the Queensland Kindergarten Learning Guideline; or

b. an alternative kindergarten learning guideline accredited by the Queensland Curriculum and Assessment Authority (this accreditation requires, amongst other things, that the guideline meets the educational and social criteria under sections 5 and 6 of the Education (Queensland Curriculum and Assessment Authority) Regulation 2014 (Qld)).[5]

3. The School will be required to opt into the free kindergarten scheme. It remains to be seen what further implications may accompany an opt in decision.

Whilst Schools offering kindergarten services should continue to comply with the current eligibility and subsidy requirements in the Queensland Government’s Queensland Kindergarten Funding Essentials, it is expected that updated requirements will be introduced to take effect from 1 January 2024 to reflect the announced reforms.[6]

The full joint ministerial statement from the Queensland Premier, Treasurer and Education Minister announcing the scheme can be found here: https://statements.qld.gov.au/statements/97916

This Update is general information only, and is not Legal Advice.

This Update was written by Alistair Macpherson & Jackson Litzow.


[1] https://earlychildhood.qld.gov.au/early-years/kindergarten/free-kindyhttps://earlychildhood.qld.gov.au/early-years/kindergarten/what-does-kindy-cost/kindy-savings

[2] https://www.business.qld.gov.au/industries/service-industries-professionals/service-industries/child-care/approved-kindy-programs/requirements

[3] https://earlychildhood.qld.gov.au/fundingAndSupport/Documents/kindy-funding-essentials-sessional-kindergartens.pdfhttps://earlychildhood.qld.gov.au/fundingAndSupport/Documents/kindy-funding-essentials-sessional-kindergartens.pdfhttps://earlychildhood.qld.gov.au/fundingAndSupport/Documents/kindy-funding-essentials-long-day-care.pdf

[4] https://www.business.qld.gov.au/industries/service-industries-professionals/service-industries/child-care/approved-kindy-programs/requirements

[5] https://www.qcaa.qld.edu.au/kindergarten/accreditation-guidelineshttps://www.qcaa.qld.edu.au/downloads/about/syll_accred_guideline_yrs1to12.pdf

[6] https://earlychildhood.qld.gov.au/early-years/kindergarten/free-kindy

Commonwealth Funding of Religious Schools is Constitutional

Hoxton Park Residents Action Group Inc v Liverpool City Council [2016] NSWCA is a recent New South Wales Court of Appeal decision which considered the constitutional validity of the Commonwealth’s Schools Assistance Act 2008 (Cth) and the Australian Education Act 2013 (Cth) (“the Acts”). The Acts provide the framework for substantial government funding to Australian schools, of which non-government religious schools substantially benefited.

In this case, the Hoxton Park Residents Action Group (“the appellants”) sought the cessation of government funding pursuant to the Acts to an Islamic school in the residents’ area (and consequently all religious schools). They claimed that the funding was unconstitutional pursuant to sections 96 and 116 of the Australian Constitution. Under the Acts, the Malek Fahd Islamic School received an annual payment of $17, 589, 958.

 

The Impugned Acts and the Australian Constitution

Section 96 of the constitution allows the Commonwealth parliament to make laws which provide financial assistance to the States. Section 116 prohibits the parliament from creating laws which establish any religion, impose any religious observance or prohibit the free exercise of religion.

The appellants argued that firstly the Commonwealth Parliament could not pass the Acts under section 96 as the Acts indirectly regulated education and religion. Education and religion are matters which only the States can pass laws on. As such, the Commonwealth could not rely on section 96 as a head of power.

The appellants also argued that the Acts funded religious schools, and therefore helped establish religion and impose religious observance (activities prohibited in the Constitution). The appellants argued that the public should not be forced to pay taxes for such purposes.

 

The Purpose of the Acts

The Commonwealth Government passed the Schools Assistance Act and the Australian Education Act in 2008 and 2013 respectively for the purpose of elevating Australia’s education ranking internationally. The Acts operated by providing for financial grants to the States under the condition that the money was applied to eligible schools under the schemes.

It was found that 88.7% of the schools which received funding were affiliated with a particular religion from a variety of denominations. One of the schools which benefitted from the Acts was the Malek Fahd Islamic School in Hoxton Park, Western Sydney. The school adhered to the Islamic faith, and participated in compulsory rituals in line with their ethos. Comparisons could be drawn to Christian based schools where students participate in daily prayer or weekly chapel services, or where students are required to wear modest uniforms.

In 2015 the case was dismissed from the New South Wales Supreme Court. The appellants appealed to the New South Wales Supreme Court of Appeal.

 

Issues before the Court of Appeal

While the Court addressed a number of issues (including whether the appellant had standing to bring the action), the two main issues considered in relation to the Acts were:

    • Whether the Acts were invalid because the States have exclusive power over matters of religion and education? On the proper construction of section 96 could the Commonwealth create laws which incidentally affected these matters?

    • Whether the Acts were invalid because they contravened section 116 of the Constitution?

 

Held

The New South Wales Supreme Court of Appeal dismissed the appeal with costs.

 

Did the Acts have a Head of Power?

The appellants argued that the Acts did not have a head of power because section 96 only allows for the funding of States in so far as the Act has a purpose which the Commonwealth can legislate on (for example, education), and in so far as the Act does not infringe on explicit restrictions outlined in the constitution (religion).  Here is was argued that creating laws which granted financial assistance to the States for the purpose of affecting education was not within the scope of power of section 96; creating funding laws which indirectly affected matters which were the exclusive jurisdiction of the States – education and religion – was unconstitutional.

The Court rejected this argument.

Section 96 of the Constitution allows the Commonwealth Parliament to “grant financial assistance to any State on such terms and conditions as the Parliament thinks fit”. The Court held that this section should be construed in light of case law and other provisions of the Constitution. Particularly, Beazley P and Macfarlan JA held that section 96 be read in conjunction with sections 51 (xxxvi) and 51 (xxxix) to uphold the funding Acts. Section 51 (xxxix), in particular, states that the Parliament can pass laws on matters incidental to the execution of a power under the Constitution. Therefore, in this instance the parliament could create laws which indirectly affected education as the affect incidental to the execution of section 96. The Commonwealth can pass laws under section 96 whether or not the object of the Act (education) is outside the Commonwealth’s legislative power, as long as this law does not encroach on explicit restrictions in the constitution. This was explained to mean that:

The Commonwealth may enact laws that provide for the payment of grants to the states on specific conditions and, provided that the conditions do not contravene an express or implied limitation on Commonwealth power, there is no limit on the subject matter or type of conditions that may be imposed.”

Her honour Beazley P cited the decision of Mason J in Ex rel Black in affirming that section 96 could therefore be used to “make the State a conduit pipe in channelling the fund to the intended recipient.” Here, the State could be used as a means to channel funds for the purpose of education.

 

Did the Acts offend Section 116?

Basten JA discussed that there needs to be a balance between the pubic interest of not imposing religion on the public (the first limb of 116) and the private interest of protecting the free exercise of religion (the third limb); to say that the State has no concern in this private interest of religion “or should have no interest in them, is to assume that tolerance and harmony are more likely to prevail where the state maintains secular neutrality and intervenes only at the margins.”

Basten JA cited Black J in the New Jersey case of Everson to highlight that while the public should not be forced to pay a tax which will directly or indirectly fund a religion, the state should not deprive the religious sector of neutral services such as “ordinary police and fire protection”. In the same way, religious schools should not be deprived of funding of neutral services such as for core educational subjects. For this reason the Supreme Court has “upheld numerous schemes whereby government funds are distributed to schools for secular non-religious purposes”.

Both Beazely P and Basten JA (with Macfarlan JA agreeing) concluded that on the construction of the Acts, the purposes were for these secular and not religious purposes. Namely, the objects were all directed to the “education of Australian children in what I will describe as the core secular disciplines such as reading, mathematics, science, writing and numeracy.” For this reason, the Acts did not infringe on the restrictions outlined in s116.

 

Our Comments

Hoxton Park illustrates the Australian Constitution’s and the Court’s recognition of the role that religious bodies play in Australian society. The Constitution strikes a balance between the public and private realms, and serves to protect religious bodies from being deprived of being the delivery vehicles of education (albeit from their worldview).

 

If you would like further information on Commonwealth Funding of Religious Schools

Please contact our Client Engagement Team or call us on (07) 3252 0011 to book an appointment with one of our Educational Lawyers today.

This article was written by Andrew Lind (Director).

 

Other related article

https://corneyandlind.com.au/resource-centre/the-effective-use-of-public-ancillary-funds-and-other-dgr-funds-by-schools-to-fund-recurrent-and-capital-expenditure-with-deductible-giving/