CITATION: Australian Academy of Commerce Pty Ltd v NSW Vocational Education and Training Accreditation Board [2010] NSWADT 225 This decision has been amended. Please see the end of the decision for a list of the amendments. DIVISION: General Division APPLICANT Australian Academy of Commerce Pty Ltd PARTIES: RESPONDENT NSW Vocational Education and Training Accreditation Board FILE NUMBER: 103014 HEARING DATES: 13, 14, 20 July and 5 August 2010 SUBMISSIONS CLOSED: 5 August 2010 DATE OF DECISION: 14 September 2010 BEFORE: Hennessy N - Magistrate (Deputy President); Burke T - Non-Judicial Member CATCHWORDS: Cancellation of registration and approval of registered training organisation – compliance with standards LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Vocational Education and Training Act 2005 APPLICANT D Jarrett, barrister REPRESENTATION: RESPONDENT P Cribb, solicitor 1.The respondent's decision to impose the "No New Business Condition" on the applicant is set aside 2.The respondent's decision to cancel the applicant's registration as a Registered Training Organisation is set aside 3.The respondent's decision to cancel the applicant's approval to provide courses for overseas students is set aside ORDERS: 4.The respondent's decision to refuse to renew the applicant's registration as a Registered Training Organisation is set aside. In substitution for that decision, a decision is made to renew the applicant's registration as a Registered Training Organisation 5.The respondent's decision to refuse to renew the applicant's approval to provide courses for overseas students is set aside. In substitution for that decision a decision is made to renew the applicant's approval to provide courses to overseas students 6.The respondent's decision to refuse the applicant's application to operate on an additional site is set aside. In substitution for that decision a condition is imposed on the applicant's approval to provide courses to overseas students that it be permitted to operate on an additional site 7.The respondent's decision to refuse the applicant's application for an increase in capacity from 150 to 465 is set aside. In substitution for that decision, a condition is imposed on the applicant's approval to provide courses to overseas students that 433 overseas students can be enrolled and studying at any time. REASONS FOR DECISION Introduction 1 In 2005 the Australian Academy of Commerce Pty Ltd (AAC) was registered under the Vocational Education and Training Act 2005 (the VET Act) and approved to provide certain business courses to overseas students. Mr Thaddeus Nabung is the principal and sole director of AAC. The respondent is the Vocational Education and Training Accreditation Board (VETAB). It has functions including the registration of Registered Training Organisations (RTOs), the accreditation of vocational courses and the approval of persons to provide courses for overseas students: VET Act, s 6. 2 In July 2007 VETAB conducted a compliance audit in relation to AAC which revealed significant non-compliances. On 15 January 2008 VETAB approved AAC's application for an increase in student capacity from 64 to 150. Subsequently AAC made several applications including: an application for a further increase in student capacity to 465; an application to operate from an additional site; and an application for the approval to teach new business courses. VETAB audited AAC again in May 2009. On 17 August 2009 VETAB resolved that a condition be placed on AAC that it not enrol any new students (the "no new business" condition). The reason for that condition was that AAC had 369 overseas students studying which was in breach of the approval for a maximum number of 150 overseas students. After receiving further information from AAC, VETAB indicated in September 2009 that it intended to make further adverse decisions. AAC provided additional information and VETAB made final decisions on 22 December 2009. Those decisions, as well as the "no new business" condition are summarised below: 1. No new Business Condition . VETAB imposed a condition that AAC not enrol any new students. 2. Cancellation of Registration . VETAB cancelled AAC's registration as an RTO. 3. Cancellation of Approval . VETAB cancelled AAC's approval to provide courses for overseas students. 4. Refusal of Renewal of Registration . VETAB refused to renew AAC's registration as an RTO. 5. Refusal of Renewal of Approval . VETAB refused to renew AAC's approval to provide courses for overseas students. 6. Additional site refusal. VETAB refused AAC's application to operate on an additional site. 7. Refusal to Increase Student Capacity . VETAB refused AAC's application for an increase in capacity from 150 to 465. 3 AAC has applied to the Tribunal for a review of these decisions. We will refer to decisions 2 and 4 as the "registration decisions" and to decisions 3 and 5 as the "approval decisions". The reasons for those decisions overlap. VETAB accepts that decision 6 (additional site refusal) ought to be set aside and approval granted if AAC is successful in relation to the registration decisions and the approval decisions. Similarly if AAC is successful in relation to decision 7 (refusal to increase student capacity) then decision 1 (no new business) should also be set aside. 4 On 13 May 2010 VETAB accepted certain undertakings from AAC to become compliant with various standards and conditions by 13 September 2010. By accepting those undertakings, VETAB has limited the Tribunal's consideration to the issues it regards as being the most significant. Power to make decisions 5 Registration and Approval decisions. VETAB has power to cancel the registration of a RTO on the ground, among others, that "the training organisation has failed to comply with the RTO standards or the registration and accreditation guidelines": VET Act, s 18(1)(d) and s 18(2)(d). VETAB has power to cancel approval for an RTO to provide courses to overseas students on the ground, among others, that the RTO "has failed to comply with the approval guidelines": VET Act, s 35(1)(d) and s 35(3)(d). The standards and approval guidelines include the AQTF Essential Standards for Registration 2007 (AQTF 2007) and the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007 (the National Code). When we refer in this decision to "the standards", we are referring to both the AQTF 2007 standards and the standards in Part D of the National Code. 6 Additional site refusal. VETAB has power to approve a person to provide courses to overseas students on conditions including on conditions 'specifying the premises in or from which the course to which the approval relates are to be conducted': VET Act, s 34(5) and s 34(6)(b). By refusing to approve an additional site, VETAB was refusing to add, as a condition for approval, that AAC could provide courses from an additional site. 7 Refusal to increase student capacity decision. Similarly, as VETAB may has power to approve a person to provide courses to overseas students on conditions, a condition may be include a cap on the number of overseas students that can be enrolled and studying at any one time: VET Act, s 34(5). Reasons for registration and approval decisions 8 VETAB submitted that the registration decisions should be affirmed because AAC remains non-compliant with standard 1.5 of AQTF 2007 which states that: Standard 1 The Registered Training Organisation provides quality training and assessment across all of its operations. Elements 1.5 Assessment, including Recognition of Prior Learning (RPL): (a) meets the requirements of the relevant Training Package or accredited course, (b) is conducted in accordance with the principles of assessment and the rules of evidence, (c) meets workplace and, where relevant, regulatory requirements. 9 VETAB submitted that the approval decisions should be affirmed because AAC remains non-compliant with Standard 14.2 of the National Code: Standard 14 – Staff capability, educational resources and premises Outcome of Standard 14 The staff of registered providers are suitably qualified or experienced in relation to the functions they perform for students. The educational resources of registered providers support the delivery of courses to students. The premises of registered providers, including the floor space available for each student, support students to achieve their course outcomes. . . . 14.2 The registered provider must have adequate education resources, including facilities, equipment, learning and library resources and premises as required by the quality assurance framework applying to the course. Where the course provided by the registered provider is not subject to an appropriate quality assurance framework, the registered provider must ensure it has adequate education resources, including facilities, equipment, learning and library resources, and premises, including ownership or tenancy arrangements for the premises, as are needed to deliver the registered course to the students enrolled with the registered provider. Measuring compliance 10 When determining whether an RTO "complies with the RTO standards" the decision maker is being asked, among other things, to make an assessment about the degree to which the RTO is achieving the outcome expressed in each of the standards based on an assessment of each element within the standard. 11 The Commonwealth government has produced a guideline entitled National Guideline for Managing Non-Compliance (National Guideline). That document sets out how regulators should ensure that an RTO is treated fairly and given every opportunity to demonstrate compliance. The National Guideline makes the point that the type of sanction to be imposed depends on the nature and extent of non-compliance and the degree of risk it presents to consumers and the Vocational Education and Training system. Compliance history is said to be relevant when determining sanctions. Three categories of non-compliance are identified: minor, significant and critical. For minor non-compliances, it is suggested that no sanction be imposed provided it is rectified within the applicable period. For significant non-compliances, the suggested sanctions include imposition of conditions and amendments to the registration. Critical non-compliance arises where there is a critical adverse impact on learners and/or consumers. In those cases the National Guideline suggests that an RTO be given up to 20 working days to remedy the non-compliance. Possible sanctions for critical non-compliance are the imposition of conditions, the amendment of registration, suspension of registration and cancellation of registration. VETAB has not formally adopted the National Guideline as an 'approval guideline' but it provides a useful framework for considering the issues in these proceedings: VET Act, s 40. Issues 12 The general issue is whether each of VETAB's decisions is the 'correct and preferable' decision: ADT Act, s 63. In determining that issue, the Tribunal must have regard to the material then before it, including any relevant factual material and any applicable written or unwritten law: s 63(1). The Tribunal 'stands in the shoes' of VETAB and may exercise all of the functions that are conferred or imposed on VETAB: ADT Act, 63(2). The Tribunal may affirm, vary or set aside VETAB's decisions. The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: ADT Act, s 73(2). 13 The specific issues in these proceedings can be summarised as follows: 1. Do AAC's training and assessment materials comply with Standard 1.5 of AQTF 2007 and Standard 14.2 of the National Code? If not, what is the nature and extent of that non-compliance? 2. Does the nature and extent of any non-compliance justify the registration decisions and the approval decisions taking into account the time AAC has had to address the non-compliances? 3. If the correct and preferable decision is to set aside the registration and approval decisions and allow AAC to continue to operate, how many students should AAC be permitted to have enrolled and studying at any one time? Issue 1: Assessment materials – compliance with standards? 14 Ms Dew is an auditor engaged by VETAB. After receiving further material from AAC during the course of the hearing, she prepared a Further Amended Respondent's Report of Non-Compliances (the Further Amended Report) summarising the ways in which AAC's assessment materials did not comply with the standards. Ms Dew's evidence related to whether the assessment tasks provided by AAC adequately assess a student's competencies. She set out approximately 35 criticisms related to the following courses: BSBCUS201A - Deliver a Service to Customers, BSBIND201A - Work Effectively in a Business Environment, BSBADM311A - Maintain Business Resources, BSBFIA302A - Process Payroll, BSBITU307A - Develop Keyboarding Speed and Accuracy and BSBSMB402A - Plan Small Business Finance. 15 Ms Dew's assessment was based on the materials provided by AAC. She did not attend the premises or talk to the teachers. She said that it was unclear in several cases what the student was required to do. In other cases, students were not given sufficient opportunity to demonstrate their skills and knowledge in all unit requirements. In relation to the assessors, while marking guides and feedback forms were provided, they were deficient in some respects. For example, some marking guides did not provide adequate guidance to the assessor as to what would be considered a suitable answer. 16 AAC relied on expert evidence from Mr Trice, an experienced consultant in the vocational education sector. He prepared four expert reports in these proceedings. He attended AAC's premises on one occasion. The majority of his opinions were formed after a desk audit of the material. He responded to most of Ms Dew's criticisms in his written evidence and elaborated on those comments in cross-examination. Mr Trice ultimately accepted that nine of the approximately 35 criticisms Ms Dew had made were valid and chose not to comment on four others. That leaves approximately 22 criticisms with which Mr Trice disagreed. 17 Some of the reasons for his disagreement can be summarised as follows: a) the adequacy of assessments materials cannot be judged without talking to the students who have undertaken the assessments and the teachers who have developed and used the assessment materials; b) teachers are subject matter experts and would know from classroom activities and their knowledge of the subject what skill or knowledge was being assessed and whether students have demonstrated that they have that skill or knowledge; c) students would know what they are being asked to respond to from their learning, even if the scenario they are given in the assessment does not raise the issue specifically. 18 Mr Trice's observations and opinions do not adequately explain Ms Dew's criticisms. We agree with Mr Trice that people who are not familiar with the subject area being assessed may not appreciate the intent behind particular questions or scenarios in the assessment materials. Nevertheless, in relation to the specific criticisms made by Ms Dew, it should not be necessary to consult with teachers to clarify what was meant by particular questions or whether particular skills or knowledge were being assessed. The documentation relating to assessment exercises should be such that its intention can be understood not only by students but also by teachers and auditors. 19 Mr Trice assumed that if a teacher was not satisfied with a written answer provided by a student, he or she could discuss their answer. He conceded that he did not know if AAC allows students to elaborate orally on their written answers. We regard this suggestion as unrealistic. 20 Mr Trice also suggested that an assessor would have access to classroom activities to complement the assessment activities outlined. He said that if a student had previously demonstrated the particular knowledge or skill being assessed, the assessor could take that into account. No evidence was presented by Mr Trice that this formative approach was actually being adopted. His answer does not reflect our understanding of the evidence, that is that the assessment tasks as outlined are occasions on which a student is asked to demonstrate in a summative way his or her knowledge or skill. 21 Mr Trice eventually conceded that he had doubts as to whether the assessments as outlined in the documentation cover all the skills and knowledge required to be demonstrated. 22 AAC's principal and sole director, Mr Nabung agreed that Ms Dew's criticisms were generally valid and that AAC needed to review the assessment materials. Mr Jarrett, representing AAC, emphasised that AAC was relying on Mr Trice's evidence, not Mr Nabung's in relation to the adequacy of the assessments. 23 We are satisfied that each of Ms Dew's approximately 35 criticisms of the assessment materials is justified notwithstanding Mr Trice's disagreement. Those criticisms mean that, contrary to Standard 1.5 of AQTF 2007, the assessments are not being conducted in accordance with the principles of assessment and the rules of evidence in relation to those matters. Issue 2: Do non-compliances justify registration and approval decisions? 24 Both parties described the non-compliances as minor. The fact that the parties agreed on that point is significant. We find that they are minor and that they relate to only a relatively small proportion of AAC's assessment materials. We are also satisfied that AAC has been on notice of these non-compliances since at least September 2009 when VETAB provided an audit report. 25 According to Mr Cribb, although the National Guideline suggests that minor non-compliances do not ordinarily justify cancellation of registration, the fact that AAC has had almost 12 months to address these issues means that the Tribunal cannot be satisfied that they will be addressed in the future. Mr Trice's opinion was that AAC has gone from having significant non-compliances to minor non-compliances by a process of continuous improvement and that that process will continue. He said that AAC needs to commit to a different management framework. He said that at the moment there are too many layers of bureaucracy and procedural requirements. According to Mr Trice, unless AAC starts managing their activities in the way he recommended, non-compliances would be likely to remain. 26 Mr Nabung set out in his statement the history of AAC's interaction with VETAB and the measures it has taken to address its concerns. According to Mr Nabung, compliance with the standards is 'tough' because the standards change and people disagree as to what they mean. He agreed, however that the standards have been the same since the beginning of 2008. Mr Nabung also agreed that the outstanding non-compliances need to be addressed and proposed that that would happen through a more detailed and intense process of "moderation" whereby he meets with teachers to evaluate and amend the assessment materials where necessary. 27 While we agree that Mr Nabung may find it difficult to comply with the standards because of the general way in which many of them are expressed, those standards have not changed since the beginning of 2008. Furthermore, VETAB has informed AAC of the ways in which their assessment materials do not comply. The majority of non-compliances have been addressed and we accept that Mr Nabung is committed to addressing the remaining issues. We are satisfied that there will be no critical adverse impact on students provided AAC complies with the condition of registration in s 13(4)(c) of the VET Act, that is "take all necessary steps to comply with the RTO standards if a compliance audit shows that the RTO does not comply with those standards". While we do not intend to make an order in relation to the time frame in which those steps must be taken, we expect that AAC will take those steps within 3 months of the date of this decision. Issue 3: Student capacity 28 Ms Bateman conducted an audit of AAC late in 2009 and completed her report on 20 December 2009. In that report she noted that the total approved capacity for the two premises occupied by AAC was 148 students at one time. That figure was calculated on the basis of rooms which were capable of accommodating 41, 40, 38, 20 and 16 students respectively and a computer room that could accommodate 25 students. Ms Bateman noted the following issues: An analysis of the timetable and class lists indicate that classes vary in size from 33 to 43. Room size maximum was one room of 41 students. However, audit revealed that six class lists exceeded classroom capacity. Current classroom configurations are not consistent with sound educational practice and competency-based training. 29 Following the provision of further evidence on 20 October 2009, Ms Bateman noted that classes are now capped according to the seating arrangements however there was no evidence of class lists, timetables or other evidence to confirm that that was the case. Mr Nabung gave evidence that since the audit was conducted five new computers have been purchased and consequently there is capacity for 30 students in the computer room. 30 AAC applied for an increase in student capacity from 150 to 465 students. AAC's figure is calculated on the basis of the fact that it has six rooms available and those rooms have seats for 41, 40, 38, 25, 20 and 16 students respectively. If each room is filled to capacity, there will be an average of 30.59 students per room. Students must attend class for 20 hours per week and AAC intends to operate 5 days a week. There is a total of 304 teaching hours available each week. That figure is based on the assumption that existing staff can provide a total of 208 teaching hours per week and four new staff would be able to provide an additional 24 hours each of teaching time giving a total of 96 more hours. Consequently the figure of 465 students is calculated as follows: 465 = 30.59 (students) x (208 + 96) hours 20 hours per student 31 VETAB submitted that AAC's capacity was 325. That figure was based on allowing existing staff to increase their workloads to a total of 208 hours per week in accordance with AAC's claim, but only allowing an additional 25% of hours to come from staff yet to be recruited. Based on that restriction, the 208 hours per week provided by existing staff would be increased by 52 hours as opposed to the 96 hours claimed by AAC. The second assumption on which VETAB based its calculation was that there should be an average maximum class sizes of 25, rather than 30.59 as claimed by AAC because it is not academically sound to have classes much larger than 25. Consequently, the figure of 325 is calculated as follows: 325= 25 (students) x (208 +52) hours 20 hours per student 32 Teaching hours. There was no evidence to support VETAB's submission that no more than an additional 25% of teaching hours should be calculated on the basis of staff yet to be recruited. We are satisfied that AAC can provide 304 hours of teaching time per week. 33 Size of rooms. The size of the available rooms will determine the maximum number of students that can be accommodated in any one room. In this case there was no dispute that each room could accommodate the students corresponding to the number of seats in the room. 34 Class sizes. The remaining issue is class sizes. AAC submitted that class size should average 30.59, with up to 41 students in a class. Mr Cribb submitted that, for educational reasons, class size should average 25. Mr Nabung disagreed with Mr Cribb's proposition that an average of 25 was more appropriate than an average of 30.59 for the business courses being offered. When auditing AAC in December 2008, Ms Bateman mentioned sound educational practice as a consideration when determining capacity. We agree with Mr Cribb that educational outcomes must be taken into account in determining class sizes. Calculating capacity according to an average number is not educationally sound because it means, in this case, that class sizes may be as high as 41. Having regard to the fact that AAC enrols overseas students, and having noted the competencies expected, it is our view that in order to comply with the standards, class sizes for business courses should not exceed 35. On the basis that the computer room now has capacity for 30 students, that means that class sizes in each of the available rooms would be 35, 35, 35, 30, 20 and 16 respectively, giving a total of 171. When this figure is divided by 6, multiplied by 304 hours and then divided by 20 hours, the result is 433. That, in our view, is the maximum number of students that should be permitted to be enrolled at any one time. Orders 1. The respondent's decision to impose the "No New Business Condition" on the applicant is set aside. 2. The respondent's decision to cancel the applicant's registration as a Registered Training Organisation is set aside. 3. The respondent's decision to cancel the applicant's approval to provide courses for overseas students is set aside. 4. The respondent's decision to refuse to renew the applicant's registration as a Registered Training Organisation is set aside. In substitution for that decision, a decision is made to renew the applicant's registration as a Registered Training Organisation. 5. The respondent's decision to refuse to renew the applicant's approval to provide courses for overseas students is set aside. In substitution for that decision a decision is made to renew the applicant's approval to provide courses to overseas students. 6. The respondent's decision to refuse the applicant's application to operate on an additional site is set aside. In substitution for that decision a condition is imposed on the applicant's approval to provide courses to overseas students that it be permitted to operate on an additional site. 7. The respondent's decision to refuse the applicant's application for an increase in capacity from 150 to 465 is set aside. In substitution for that decision, a condition is imposed on the applicant's approval to provide courses to overseas students that 433 overseas students can be enrolled and studying at any time. 24/09/2010 - Typographical error in name - Paragraph(s) 1 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.